Analysts Shine Light on Three Stock Giants: Facebook Inc (FB), JPMorgan Chase & Co. (JPM), Netflix, Inc. (NFLX)


U.S. stocks declined Wednesday as investors pore over the latest earnings reports for the third quarter.   Subsequently, analysts weighed in on the social media giant Facebook Inc (NASDAQ:FB), banking giant JPMorgan Chase & Co. (NYSE:JPM) and streaming media giant Netflix, Inc. (NASDAQ:NFLX), with mixed ratings.

Facebook Inc

Piper Jaffray analyst Gene Munster was out pounding the table on Facebook Wednesday, reiterating an Overweight rating and price target of $146, which represents a potential upside of 55% from where the stock is currently trading.

Munster noted, “Investors are well aware that Facebook’s play into virtual reality (VR) strengthens in Q1 2016 with the expected release of the Oculus Rift virtual reality headset. We see the Rift as a catalyst to FB shares, but also believe there is another major emerging theme around Facebook’s exposure to mixed reality (MR). MR (sometimes referred to as augmented reality) blends the physical and digital worlds, and thus has the potential to replace displays as we know them (smartphones and PCs). Our belief that Facebook will evolve to participate in both VR and MR is based on recent key competitive hires along with Mark Zuckerberg’s comments at the Vanity Fair New Establishment City Summit last week.”

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Gene Munster has a total average return of 21.4% and a 63% success rate. Munster has a 38.4% average return when recommending FB, and is ranked #2 out of 3773 analysts.

Out of the 47 analysts polled by TipRanks, 42 rate Facebook Inc. stock a Buy, 4 rate the stock a Hold and 1 recommends Sell. With a return potential of 16.9%, the stock’s consensus target price stands at $110.24.

JPMorgan Chase & Co.

In a research report released Tuesday, Oppenheimer analyst Chris Kotowski reiterated a Perform rating on shares of JPMorgan, after the company reported its earnings for the third-quarter, which were highlighted by a staunch rise in profits. However, the performance was underpinned by missed consensus expectations and declining revenues.

Kotowski wrote, “JPM reported 3Q15 EPS of $1.68 and put its operating EPS at $1.32 versus our $1.36 estimate and consensus $1.37. Our own adjustments differ slightly from JPM’s, and we would put core operating EPS at about $1.27 (assuming that the provision equals NCOs and a 31% tax rate). Last year’s reported EPS were $1.36, and we had put core operating EPS at $1.39, so depending on which set of numbers one looks at, core earning are down somewhere between the low single digits or the upper single digits. This is not unexpected in a quarter where FICC trading was down 23%, but asset management and mortgage banking also showed lackluster trends.”

“As a result, we once again trimmed our estimates slightly. The shares are not expensive at ~10.0x our new 2016 estimate and 1.3x TBV, but for the time being we continue to prefer BAC and C, which we believe are more likely to increase their returns over the near term,” the analyst concluded. 

According to TipRanks, analyst Chris Kotowski has a total average return of -0.5% and a 54.7% success rate. Kotowski has a 12.5% average return when recommending JPM, and is ranked #2773 out of 3773 analysts.

Out of the 20 analysts polled by TipRanks, 17 rate JPM stock a Buy, while 3 rate the stock a Hold. With a return potential of 16%, the stock’s consensus target price stands at $69.71.

Netflix, Inc.

Netflix will report its Q3 results today after market close. Year-to-date, shares of the company have surged by over 130% from a low of $45.55 on January 12th. Analyst Robert Peck of SunTrust weighed in on the stock ahead of earnings.

Yesterday, Peck maintained his Neutral rating on the stock but increased his price target for to $110 from $95.

Netflix operates in three distinct segments: domestic streaming, international streaming, and domestic DVD. As per Peck, “While Netflix might miss the domestic subscriber guidance, the company saw significantly higher net additions in 3Q15 compared to prior Q3s.” Additionally, Peck said that his “proprietary analysis of the popularity of new content does not seem to justify the guidance.”

Peck also noted that trial memberships for the quarter were meaningfully lower than in prior Q3s. Referring to net international additions for 3Q15, Peck says “these were in-line with prior Q3s, while trial members were comparable to Q2.

Peck’s proprietary analysis also indicates “continued strength in Latin America, while Japan could be a wildcard.” In the most recent quarter, the company added Japan in line with its plans to expand in Asia.

Referring to price increases by Netflix (in 2014 and also one a few days ago, but this time only for new users), Peck said, “Grandfathered pricing from the 2Q14/4Q15 price increases will expire on 2Q16/4Q16 and could cause an uptick in churn.”

Peck has raised his 2015 and 2016 revenue and EBITDA estimates for the company to reflect “flow-through of price increases partly offset by lower domestic paid members.”

According to Tipranks, Peck has a 59% success rate recommending stocks with a 9.0% average return per rating when measured over a one-year horizon and no benchmark.

According to TipRanks, out of 30 analysts who have recently rated Netflix’s stock, 21 have rated it as a Buy, 7 have rated it as Hold, and 2 have rated it as Sell. The average 12-month price target for the stock is $124.44, an upside of 13.41% from current levels.

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