What to Expect When Facebook Reports After the Close

Chris Lange

Facebook Inc. (NASDAQ: FB) is scheduled to release its third-quarter financial results after the markets closed on Tuesday. The consensus estimates are calling for $1.47 in earnings per share (EPS) and $13.78 billion in revenue. In the same period of last year, the social media giant said it had $1.59 in EPS and $10.33 billion in revenue.

Wedbush recently issued a Buy rating for Facebook with a $250 price target. The firm also added it to its Best Ideas List.

The firm expects Facebook to get back on track by the end of 2019 and for revenues and profits to grow for many years. However, the second-quarter “miss” caused Wedbush to rethink the company’s growth trajectory, and given that it lowered estimates based on second-quarter results and high-level full year commentary, the firm also lowered its price target accordingly at that time.

Wedbush continues to believe that it is appropriate to value Facebook shares at an EV/EBITDA multiple of 20 times, particularly given that the company’s EBITDA is not adjusted for stock-based compensation (in contrast to many of its peers). Applying this multiple to the 2019 EBITDA estimate of $34.51 billion leads Wedbush to its 12-month price target of $250 per share.

Excluding Tuesday’s move, Facebook has underperformed the broad markets, with the stock down 20% in the past 52 weeks. In just 2018 alone, the stock was down roughly the same.

A few other analysts weighed in on Facebook ahead of the release:

  • SunTrust has a Buy rating and a $200 price target.
  • RBC has a Buy rating with a $225 price target.
  • Macquarie has a Buy rating with a $190 price target.
  • Wells Fargo has a Buy rating and a $220 price target.
  • Merrill Lynch has a Buy rating with a $190 target.
  • Cleveland Research has a Buy rating.

Shares of Facebook were last seen down 1.5% at $139.94, with a consensus analyst price target of $206.74 and a 52-week trading range of $139.03 to $218.62.