“Did you see it on Facebook?” is the new “Extra, Extra – read all about it.” From the political scandal of Cambridge Analytica to data privacy issues involving Russian cyberscrapers, you could say Facebook (FB) has been making it into the headlines.
Monness’ top analyst Brian White believes the social media giant will be able to clean up its mess at some point, but probably not before having some slip-ups in 2019. That being said, White believes Facebook is a major innovator in the tech world and will rise above the bad press and become a stronger company. Therefore, White reiterates a Buy rating for the stock with a price target of $205, which shows an upside of 37% from the current levels.
While the company dealt with plenty of animosity in 2018, investors are hoping some good news when Facebook reports its third-quarter earnings on Tuesday afternoon.
“We believe Facebook will approach our 3Q:18 revenue projection of $13.74 billion (up 33% YoY) and the Street’s forecast of $13.78 billion. We are estimating 3Q:18 EPS of $1.41 and the Street is projecting $1.47. Our 33% YoY revenue growth estimate for 3Q:18 represents a substantial deceleration from the 49% growth delivered in 1Q:18 and the 47% a year ago in 3Q:17. Recall, Facebook indicated on its 2Q:18 call that the YoY revenue growth rates in 3Q:18 and 4Q:18 would fall by a high single-digit percentage from the prior quarters sequentially, driven by the negative impact of FX, promotion of Stories on Facebook (lower monetization) and the impact of data privacy dynamics. Our 3Q:18 forecast calls for a 4% QoQ rise in sales, well below the average rise of 10% over the past four years and the 11% uptick in 3Q:17.” White predicts.
The analyst points out that since the last earnings report, Facebook has had more co-founder departures and other major negative issues — like missing and then needing to reorganize a meeting with the Senate Intelligence hearing as well as announcing a major security breach. Regardless, White stays positive for the fourth quarter.
As usual, we like to include the analyst’s trackrecord when reporting on new analyst notes to give a perspective on the effect it has on stock performance. Brian White has a very good TipRanks score with a 64% success rate and a yearly average return of 16.6%. White stands at #82 out of 4,889 on the analyst leaderboard.
Overall, most analysts on Wall Streets are out rooting for the social media giant to be a winning stock pick, as TipRanks analytics showcase FB as a Strong Buy. Based on 38 analysts polled in the last 3 months, 32 are bullish on Facebook stock, while 5 remain sidelined and only one is bearish. The 12-month average price target stands at $201.52, marking a 35% upside from current levels. (See FB’s price targets and analyst ratings on TipRanks)