In the thick of earnings season, there is never a dull moment for investors. Today, Wedbush analyst Michael Pachter weighed in on social network giants Facebook Inc (NASDAQ:FB) and LinkedIn Corp (NYSE:LNKD), with mixed ratings and views.
With Facebook preparing to release third-quarter earnings on on Wednesday, November 4, Pachter weighed in today with his prediction. According to TipRanks, Pachter has a 56% average return when recommending FB.
The analyst expects Facebook to once again exceed consensus EPS expectations. He noted, “Our estimates are for revenue of $4,395 million and EPS of $0.55, versus consensus of $4,367 million and $0.52. We expect mobile ad revenue, which was 76% of total ad revenue and up 74% y-o-y in Q2, to drive overall topline growth, with mobile News Feed ads acting as the largest contributor.” Furthermore, “We expect the company to reinvest a considerable portion of its EBITDA growth in new initiatives, including building out advertising platforms for Instagram, Messenger, and WhatsApp, while at the same time investing in growing its Oculus VR offering. Notwithstanding the impact of reinvestment on free cash flow, we think that Facebook is positioned to continue to grow revenues and contribution profit at a very high rate for the foreseeable future, and we think that the stock has the potential to appreciate for several more years.”
Pachter reiterated an Outperform rating on Facebook shares, with a price target of $115, which represents a potential upside of 12% from where the stock is currently trading.
After Thursday close, LinkedIn reported a strong third-quarter, with each of its major segments beating expectations, sending shares up 12.41% to $243.92. In reaction, Wedbush’s Michael Pachter raised his price target to $232 (from $200), while reiterating a Neutral rating on the stock.
Pachter commented: “LinkedIn delivered a large top-line beat while demonstrating strong cost control. As a result, EBITDA and EPS vastly exceeded our expectations. Revenue was $780 million (above guidance of $745 – 750 million), adjusted EBITDA was $208 million ($146 – 148 million), and non-GAAP EPS was $0.78 ($0.43).”
Furthermore, “LinkedIn guided roughly in line with consensus, expecting revenue of $845 – 850 million (consensus is at $846 million) and EPS of $0.74 (consensus is at $0.67). While it is likely that revenue guidance is conservative, higher than expected EPS guidance reflects a newfound desire to control expenses and deliver higher profits. We are raising our price target to reflect improving profitability.”
“The core business continues to grow as the company offers an increasing array of products to recruiters and job seekers. We have never questioned the potential of LinkedIn’s Talent Solutions business, and Q3 results reinforced that the company is well on the path to dominate the recruiting industry for years to come. Customer re-segmentation in Q1 plus new subscription options are driving Talent Solutions and resulting in solid Corporate Solutions growth,” the analyst concluded.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Michael Pachter has a total average return of -1.8% and a 45.1% success rate. Pachter is ranked #3295 out of 3808 analysts.
Out of the 22 analysts polled by TipRanks in the last 3 months, 17 rate LinkedIn stock a Buy, while 5 rate the stock a Hold. With a return potential of nearly 10%, the stock’s consensus target price stands at $269.11.