Facebook (FB) Redeems Itself with Decent Earnings Report, But Will the Stock Continue Down the Right Path?


Facebook (FB) opened its sails and battled against big winds. The company, which many investors feared would do poorly after scandals of security breaches and data leaks, was able to (almost) meet expectations and guidance. Top SunTrust analyst Youssef Squali is on deck, reiterating a Buy rating for Facebook with a price target of $200, showing a 29% upside from where the stock is currently trading.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Youssef Squali has a yearly average return of 18.2% and a 64% success rate. Squali has a 15.7% average return when recommending FB, and is ranked #68 out of 4,887 analysts.

The analyst says he supports Facebook due to a strong user base, a prioritization of the user experience in regard to security, favorable return on investment for marketers, more engagement from users with Facebook stories and a compelling valuation.

“Reported revenue for the quarter was $13.73 billion vs. consensus estimate of $13.77 billion (+33% y/y), with advertising revenue coming in at $13.54 billion vs. consensus estimate of $13.62 billion. GAAP operating income was $5.78 billion with a margin of 42.1% versus expectations of $5.77 billion and 42.0%. GAAP EPS was higher than expectations at $1.76 versus $1.46 due to a income tax provision,” Squali said.

Though data shows Facebook’s overall monthly and daily active user rates are decelerating (matching cautious Street estimates), Squali believes the numbers aren’t as bad as they could have been — considering the company’s PR nightmare that spanned over the course of the better part of this last year.

“Strong Buy”—that’s the word on the Street, at least according to TipRanks. Looks like the Facebook boat made it across the sea, and other analysts are on board as well. TipRanks checked out 37 analysts who rated FB in the last three months. 30 recommend a Buy rating on the stock, 6 issue a Hold and 1 suggests a Sell. The consensus price target? $191.86, which implies nearly 26% from current levels.  (See FB’s price targets and analyst ratings on TipRanks)

 

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