Analysts weighed in on social media giant Facebook Inc (NASDAQ:FB) and chip maker Advanced Micro Devices, Inc. (NASDAQ:AMD) regarding their Q4:15 earnings. While one analyst remains bullish on Facebook, citing predicted stellar earnings, another remains on the sidelines for Advanced Micro Devices, as the company’s recently released Q4/2015 earnings posted a disparity between revenue and guidance.
Analyst Victory Anthony of Axium weighed in on Facebook in anticipation of its Q4 earnings report, set to release next week. The analyst expects to see revenue growth from ad sales as a result of “the ongoing shift to mobile, where pricing is higher” as well as video ad sales, Instagram, and FAN (Facebook Audience Network), which generated $1 billion in gross revenue last quarter. Anthony then goes into more detail regarding ad sales, stating that his firms’ checks with ad agencies indicated a favorable outlook for spending on Facebook, especially for video. Anthony states that advertisers have experienced a boost in both increasing ROIs and improved brand awareness. Regarding Instagram, the analyst states positive advertiser sentiment and increased efforts by Facebook to “attract small businesses” to this platform.
The analyst recommends that investors buy the stock and hold for the longer-term as the core remains strong and estimates have yet to reflect contribution from Messenger, VR, WhatsApp, portions of TV ad budgets, and the longer-term benefit of expanding internet usage through Internet.org. He also comments on WhatsApp, stating that although it waived its $0.99 annual fee, it can monetize through other methods. While investors remain concerned regarding increased 2016 ad expenses, the analyst believes this concern is “overblown” and does not predict a year of heavy investments, seeing “room for expansion even in mature markets.”
The analyst reiterates his Buy rating and $95.26 price target and states “the pullback creates a buying opportunity as valuations are reasonable vs. growth expectations.”
Victor Anthony has a 52% success rate recommending stocks with an average return of 9.7% per recommendation.
According to TipRanks‘ statistics, out of the 35 analysts who have rated the company in the past 3 months, 34 gave a Buy rating while 1 remains on the sidelines. The average 12-month price target for the stock is $125.33, marking a 32% upside from where shares last closed.
Advanced Micro Devices, Inc.
Analyst Christopher Rolland of FBR & Co. remains on the sidelines after AMD posted Q4/2015 earnings and disappointing Q1/2016 guidance, crediting lackluster console APU shipments and Chinese macro-economic difficulties. Despite this guidance, the company predicts y/y console revenue growth, which according to the analyst “[implies] a massive seasonal ramp in 2H16.” Although management’s optimism is unclear to Rolland, he speculates a price cut for Xbox that could contribute to higher sales next quarter.
Despite the company’s track record of “execution issues”, the analyst states positives such as “better-than-expected 2016 capex guidance and a flat FCF expectation.” He also states that the worst is over, as earnings did not result stock price did not suffer nearly as much as it has a few weeks ago, when shares were down 36% from yesterday’s highs. While the analyst is bullish on the company’s “strategic focus away from the core PC market and toward gaming APUs, micro servers, and customer embedded processors,” advancing over its competition, he believes “much of this transition has already played out, with visibility into meaningful peak earnings elusive.”
Rolland maintains his Market Perform rating and $2.50 price target on the company.
According to TipRanks, out of the 7 analysts who have rated AMD in the last 3 months, 1 is bullish, 1 is bearish, and 4 remain on the sidelines. The average 12-month price target for the stock is $2.65, marking a 27% upside from where shares last closed.