Cantor Fitzgerald analyst Youssef Squali is weighing in today on the social networking giant Facebook Inc (NASDAQ:FB) and social media giant Twitter Inc (NYSE:TWTR).
Today, Oculus (the VR firm bought by Facebook) held an event entitled “Step into the Rift” where it announced a partnership with Microsoft and gave some finalized details about the Oculus Rift. The substance of the Microsoft announcement is that Oculus will offer Xbox One VR streaming and the Oculus Rift will be plug and play with Windows 10. The bottom line is the Oculus integration with Windows 10 will help insure the average consumer can use Oculus.
Squali noted, “Oculus is partnering with Microsoft, making it compatible with Windows 10/Xbox One, and the device is expected to ship in 1Q:16 (along with an Xbox One controller). This is Facebook’s long-term bet that virtual reality could be the next major computing platform, but we’re not modeling in any significant near-term revenues for hardware sales. That said, this is a significant milestone for Oculus.”
The analyst rates Facebook shares a Buy, with a price target of $92, which represents a potential upside of nearly 13% from where the stock is currently trading.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Youssef Squali has a total average return of 23.8% and a 69.1% success rate. Squali has a 53.4% average return when recommending FB, and is ranked #11 out of 3647 analysts.
Twitter announced yesterday that CEO Dick Costolo will step down, effective July 1. Jack Dorsey, Twitter CoFounder and Chairman, will serve as Interim-CEO while the Board conducts a search for a replacement. On the conference call, Costolo acknowledged this process began at the end of 2014 when he initiated conversations with the Board and those conversations continued through a recent board meeting last week.
Squali commented: “Since Costolo decided to step down on his own, no impact on SBC is expected as a result of the transition. While fresh thinking is needed to help “dumb down” the Twitter consumer experience and increase the value proposition to advertisers, this announcement is the latest of several other executive departures, which calls into question talent retention and management’s ability to plan for the long term.”
Additionally, “The timing of this announcement is somewhat surprising considering that the company reaffirmed its 2Q:15 guidance and therefore had arguably more time to pick a permanent successor. Also worth highlighting, management reaffirmed that it was still not seeing the benefit from organic growth, seasonality, and growth initiatives on 2Q MAU numbers, factors that positively impacted 1Q MAU growth.”
The analyst rates Twitter stock a Buy, with a price target of $50, which represents a potential upside of 39% from where the stock is currently trading.
Out of the 39 analysts polled by TipRanks, 15 rate Twitter stock a Buy, while 14 rate the stock a Hold. With a return potential of 36.74%, the stock’s 12-month consensus target price stands at $49.09.