Facebook Inc (FB) Attractive Monetization and Ad Growth Poised to Play Out into Next Year, Cheers Daniel Ives

Daniel Ives: Facebook will outclass Street-wide expectations this evening with standout 3Q showcase.

Facebook Inc (NASDAQ:FB) is ready to enter the tech heavyweights earnings ring with a season of financial results that has glittered so far with success amid the technology sector. This evening, all eyes are on the social media titan’s third quarter print.

GBH Insight analyst Daniel Ives approaches the company through a bullish lens in his preview, angling for one more robust quarterly performance from the titan, reiterating a Highly Attractive rating on FB stock with a $210 valuation target, which implies a close to 16% increase from where the stock is currently trading. (To watch Ives’ track record, click here)

Especially singing the praises of core Facebook along with Facebook-acquired Instagram, Ives credits these two as champions of ad revenue upside, believing this will allow the company to outclass the Street’s revenue expectations of $9.8 billion. Wall Street is paying attention to waning ad load gains, calling for dipping growth in the back half of this year, but Ives conversely finds that ad trends in the third quarter look stronger than anticipated. From where the analyst is standing, this is a testament to the company’s rooted powerhouse fire in its belly as Facebook closes out 2017.

Ives notes, “On the heels of a stellar earnings season so far for tech with bellwethers Amazon, Alphabet, Microsoft among others delivering blow out earnings, we believe Facebook’s 3Q will fuel further optimism around the tech sector as ad strength, mobile monetization trends, and healthy MAU growth all speak to a social networking platform that is firing on all cylinders.”

Ahead of the print, the analyst calls for a 44% year-over-year rise in overall ad revenue, a bit of a decline against the 49% and 51% seen in the first two quarters of the year. This “speaks to massive underlying strength with a modest deceleration and tough comparables already well understood by the Street and communicated by management heading into 2H,” adds Ives.

Likewise, crucial to Facebook are monthly active user (MAU) gains, continues the analyst, who believes this arena boded well for the titan. For the third quarter, Ives projects 16% year-over-year in MAU growth to upwards of 2 billion total users now hitting that “like” button. Worthy of note, this glows as “an impressive number that is showing no signs of abating,” Ives concludes, asserting: “We also note that Instagram already announced 800 million MAUs in September (vs. 700 million in April) as this platform remains a “golden jewel” in Facebook’s platform in our opinion with healthy monetization and ad growth set to play out in 2018.”

Wall Street is all over Facebook, with the tech stock earning one of the most enthusiastic analyst consensus ratings of the financial universe. TipRanks analytics indicate FB as a Strong Buy. Out of 29 analysts polled by TipRanks in the last 3 months, 27 are bullish on Facebook stock, 1 remains sidelined, and 1 is bearish on the stock. With a return potential of nearly 12%, the stock’s consensus target price stands at $201.35.

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