Top Analyst Sets Expectations on Facebook Inc. (FB), Twitter Inc (TWTR),, Inc. (AMZN) Ahead of Earnings

Ahead of third quarter earnings, top analyst Colin Sebastian at Baird provided an update on large cap stocks in the Internet sector. Whereas the analyst believes large platforms like Facebook Inc (NASDAQ:FB) and, Inc. (NASDAQ:AMZN) are riding “healthy” secular growth trends to positive advantages, leading him to continue to add to positions of these shares “on any earnings-related pullback,” the analyst remains ultimately sidelined on Twitter Inc (NYSE:TWTR).

Colin Sebastian has a very good TipRanks score with a 76% success rate and he stands at #10 out of 4,180 on the analyst leaderboard. Sebastian earns 19.9% in his annual returns. When recommending FB, Sebastian realizes 24.5% in average profits on the stock. When suggesting TWTR, Sebastian yields 0.0% in average profits on the stock. When rating AMZN, Sebastian garners 41.0% in average profits on the stock. Let’s take a closer look:

Facebook Inc

As companies continue to switch over ad budgets to Facebook and Instagram from floundering display and offline ad channels, Sebastian believes social media checks indicate the social media titan’s social spend growth remains steady ahead of its third-quarter results expected November 2nd.

Moreover, when glancing ahead at the company’s long-term, the analyst sees concerns circling deceleration in ad load growth as “likely overblown” and believes they “could actually benefit monetization.” As such, Sebastian reiterates an Outperform rating on shares of FB with a $155 price target, which represents a 21% increase from where the stock is currently trading.

For earnings, Sebastian anticipates “slightly better than-expected” third-quarter revenues and EBITA thanks to solid growth trends, projecting revenue slightly below the Street’s estimate of $6.9 billion and EPS just under the Street’s expectation of $0.96. The analyst adds that even with estimates a bit below consensus, “we believe there is upside potential to our model with our intra-quarter checks suggesting generally steady growth trends in social media, including video and dynamic product ad formats, as well as ramping Instagram ad loads.”

“While it is too early to know how quickly Facebook’s e-commerce platform will grow, we continue to believe that social commerce will play a meaningful role in consumer shopping, and that Facebook and Messenger (along with October 17, 2016 | Internet Robert W. Baird & Co. platforms such as Pinterest) are well positioned to compete given their scale and data,” Sebastian concludes, affirming he would remain a buyer of FB shares.

TipRanks analytics exhibit FB as a Strong Buy. Based on 36 analysts polled in the last 3 months, 31 rate a Buy on FB, while 5 maintain a Hold. The 12-month price target stands at $156.60, marking a 22% upside from where the shares last closed.screen-shot-10-17-16-at-05-04-pm

Twitter Inc

Twitter is set to deliver its third-quarter print on October 27th. Yet, if Sebastian’s expectations prove true, the social networking giant could very well “significantly” cut both its guidance and outlook.

As such, the analyst remains cautious amid an onslaught of “intense competition for its users as well as advertisers,” reiterating a Neutral rating on TWTR with a price target of $16, which represents a 5% downside from where the stock is currently trading.

Sebastian expects “in-line” results, estimating TWTR to report third-quarter revenue of $604 million, marking a 6.1% year-over-year increase, and EBITDA of $149 million, a noted 25% margin, which align with consensus projections of $605 million and $149 million, respectively.

From the analyst’s perspective, though Twitter has seen quite the surge in growth when looking at the use of mobile products, with 80% of monthly active users (MAUs) using Twitter through their mobile devices since September 2014, the obstacle arises when it comes to monetization of mobile usage. Mobile ads are less prevalent on mobile applications compared to desktop devices.

However, “Despite growth headwinds, live streaming deals provide a silver lining. Management indicated that competition from other social platforms is adding pressure, limiting opportunities to stabilize market share. Near term, moderating revenue growth will result from slower advertiser growth, particularly in the US with brand advertisers,” the analyst believes.

Sebastian opines with a mixed bag of skepticism, but room for positivity, explaining, “With marketers unlikely to allocate incremental ad budgets to Twitter without seeing: a) sustained uptick in user growth, and b) higher return on ad spend, we believe ARPA growth will take time to materialize. However, the pace of innovation around Twitter’s live content partnerships is a potential source of renewed momentum with advertisers, as well as drive further user engagement/retention.”

TipRanks analytics demonstrate TWTR as a Hold. Based on 34 analysts polled in the last 3 months, 5 rate a Buy on TWTR, 21 maintain a Hold, while 8 issue a Sell. The consensus price target stands at $17.94, marking a 6% upside from where the stock is currently trading.screen-shot-10-17-16-at-05-05-pm, Inc.

Considering stabile online spending trends, Sebastian remains bullish on Amazon ahead of its third-quarter earnings, expected to be reported October 27th. As such, the analyst reiterates an Outperform rating on shares of AMZN without listing a price target.

For the online streaming giant’s quarterly results, Sebastian projects $32.4 billion in revenue, a noted 28% increase in year-over year, and $1.36 billion in Adjusted Consolidated Segment Operating Income (CSOI), marking a 4.2% margin, which more or less mirrors the Street’s projections of $32.6 billion and $1.45 billion, respectively, “despite facing a tougher top-line growth comparison,” he notes.

For next quarter, Sebastian projects fourth-quarter revenue to reach $44.0 billion and CSOI to hit $2.26 billion.

As the analyst sees the situation, “Based on our survey, Amazon continues to add product selection at a double-digit % clip year-over-year, which we view as one of the fundamental drivers of unit sales growth,” with recent surveys also revealing “healthy” levels of growth in Amazon Prime.

Moreover, the analyst adds, “We note that consensus profit expectations through 2017 continue to ramp meaningfully, which we think could prove slightly optimistic given Amazon’s ongoing investment orientation.”

Ultimately, “[…] we believe that outside of relatively mature “Media” categories, Amazon continues to expand selection rapidly in underpenetrated categories such as Clothing/Accessories, Home & Kitchen, Health/Beauty, Grocery, and Office Equipment/B2B,” Sebastian contends, anticipating profit expectations are “on the rise” into the giant’s fourth quarter and into 2017.

TipRanks analytics indicate AMZN as a Strong Buy. Based on 34 analysts polled in the last 3 months, 33 rate a Buy on AMZN, while 1 maintains a Hold. The 12-month price target stands at $932.34, marking a 13% upside from where the shares last closed.screen-shot-10-17-16-at-05-06-pm

  • MaxHoo

    IBM seems to need another couple of quarters

    IBM’s strategic businesses grew at 15%.

    Watson being applied across industries: Healthcare, IoT, Finance.

    Their CFO says it needs data from Twitter.

    Can they afford Twitter though

    Any thoughts?

    IBM Watson and analytical businesses is key to IBM-Twitter marriage.

    While it is easy to see use of “Tweets Database” by anyone with minimal imaginative talent, please don’t misunderstand. Twitter is fundamentally different than Facebook database or Google database in its basic, characteristic (two-way) social networking potential. Inherently, it shows the relationships between users and their modes of uses are somewhat like FakeBook but can go well beyond that in a “Business intelligence” sense. It is NOT easy to comprehend but see my comments below.

    Salesforce, Google or Dosney have no such requirement or advantage but then Wall Street likes to overestimate or underestimate and ignore technology’s fundamental promise and oversimplify in laymen’s trader’s terms. 🙁

    IBM with Sorry. Microsoft AI-AR-tweets partnering/combination will be very disruptive. And it will fit nicely into Satya’s Mobile-Cloud strategy.

    Microsoft’s deeper pockets are no match for IBM or others… No way! But partnership could work!!

    Although the “Business Intelligence” focus on enterprise market segment can expand IBM/Twitter into revenue stream with much higher margins without necessarily pushing for ad revenues.

    But can IBM acquire Twitter?

    Well, PNN or Professional People’s News Network needs AI to make it acceptable. Twitter is mostly used by professional individuals and organizations!!

    Higher overall potential than LinkedIn because it is far more relevant to current business minute-by-minute.

    Not LinkedIn. It’s content becomes stale and useless in its timeliness. Do you use LinkedIn for messaging and email which are time critical? NO WAY! How about Twitter? YOU NOTICE THE DIFFERENCE!

    That’s why IBM will buy. The same reason why Microsoft would like to have it.

    It is very useful following tweets as your major business meetings, preparations, or realtime events like interviews. debates or major events like Sandy and Mathew hurricanes or storm happen (or a sports event or a terrorist event) It is remarkable the ease with which you can follow tweets of your favorite person or news reporter or an organization like CN. Loomberg or PBS news hour!!!!

    I am betting on IBM (or Microsoft) to leverage its AI investments and LinkedIn to gain most by acquiring Twitter.

    Salesforce lost again. Its playing the same game as it did before LinkedIn was bought out.

    IBM CEO andMicrosoft’s Satya are clever business strategist and a texhnologist.. He controls worlds most powerful software platforms for the Enterprise Markets. Tweets within an enterprise to communicate and to support timely decision making can be huge … I am waiting for this game to unfold. If you are committed to the AR-VR via gaming XbOX investments, it can greatly benefit from “live video content” Twitter provides. You must I mgine “tweets” coming out of ChatBots as Microsoft’s AI engine integrates them into the games on its gaming platform …and allow Live Video Meeting participants to contribute their briefings or presentations more for customers in the enterprise market.

    It’s a new use of AI-AR-VR technology with Twitter content integrated!!!

    IBM can benefit greatly with new Human-Cognite Watson?