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Is It Worth Buying on Facebook Inc (FB) PR Scandal and Rocky Apple Inc. (AAPL) HomePod Speaker Sales?

Bulls shine light on two of the Street's leading giants of the tech sector- amid FB's alleged data breach and AAPL's less-than-stellar HomePod sales.


Facebook’s “Latest PR Nightmare”

Facebook Inc (NASDAQ:FB) has found itself stirring up the political pot once more after media buzz roared over the weekend of scandalous secret profile tapping.

President Donald Trump had used data analysis and mining firm Cambridge Analytica during his campaign two years ago, where the firm allegedly breached information from over 50 million Facebook users without their consent. In reaction, the social media giant’s shares have been slipping almost 3% in the aftermath in pre-market trading today.

GBH Insights analyst Daniel Ives sees the “latest data debacle” as “a risk to keep an eye on for investors.”

All the same, Ives throws his bullish weight behind CEO Mark Zuckerberg’s social media empire, noting he recommends “to be buyers on any weakness from this regulatory and political headline risk.”

As such, the analyst reiterates a Highly Attractive rating on FB stock with a price target of $225, which implies a close to 25% upside from current levels. (To watch Ives’ track record, click here)

Short-term, Ives deems the negative publicity “background noise for investors.” The analyst anticipates shifts in FB’s business model lying ahead in the next year to year and a half with regards to both advertising and news feed/content.

“We continue to keep an eye on the louder chatter coming out of regulators and politicians around Facebook’s business model being used for improper means post the Russian meddling situation, with their focus on better understanding the company’s advertising reach/algorithms, news content, and 2 billion+ users being protected from future data leaks and data protection issues. The concern from the Street’s perspective is this latest fiasco could reignite the debate within the Beltway and EU around a tighter regulatory environment Facebook and its social platform brethren could face going forward, although ultimately we believe this is more ‘headline risk’ at this point and does not overly concern us this would lead to major changes/impact to the company’s advertising fortress and key monetization engine for 2018 and beyond,” asserts Ives, who remains confident that the company has plenty of positives to “keep regulators at bay.”

Ives concludes keeping careful watch on “this latest PR nightmare.” However, thanks to investments in security, ad content artificial intelligence (AI), stronger content algorithms and screening mechanism, as well as additional platform upgrades, this analyst is staying put in the bullish camp.

TipRanks showcases FB as one of the best-liked stocks on Wall Street. The social media titan has earned a strong bullish backing, with 27 out of 30 analysts in the last 3 months rating a Buy on the stock. Only 2 analysts play it safe with a Hold rating and 1 issues a Sell. Notably, the 12-month average price target stands at 4227.79, marking a healthy upside potential of 23% from where the stock is currently trading.

Apple HomePod Still Has Potential Despite Lackluster Initial Sales

Apple Inc. (NASDAQ:AAPL) smart speaker HomePod sales have been underwhelming- but one bull remains confident that the product could down the line could gain popularity thanks to attractive pricing.

Rosenblatt analyst Jun Zhang acknowledges that HomePod sales proved “weak,” and as such cuts forecasts in half- from 6 million to 3 million units.

That said, “we believe the low-cost HomePod model could see better traction due to competitive pricing against Amazon and Google’s product as well as a timely launch time before the holiday season,” argues Zhang.

Therefore, the analyst maintains a Buy rating on AAPL stock with a $180 price target, which implies a slight 2% upside from current levels. (To watch Zhang’s track record, click here)

Yet, this tech giant is not without risk, even from Zhang’s perspective, who keeps an eye on AAPL suppliers: “We also see further risk for iPhone X production cuts as our industry research suggest there may have been reductions in Q2 component order cuts among Apple supply chain participants. We remain near-term cautious on Synaptics, QCOM, and Cirrus, as well as other names we follow including Knowles, Skyworks, Qorvo, and Universal Display.”

On an upbeat note, the analyst stands intrigued at updates awaiting the next iPhone product cycle after conducting some industry research. The iPhone 6.1-inch model will not boast the iPhone X’s OLED screen, but an LCD screen with 3D sensing design and a front-facing camera.

The bigger 6.5-inch OLED model has good odds to bring a dual-SIM design to the table, which will not only set the product apart from the 5.8 and 6.1 inch models, wagers Zhang, but likewise will have a gold sheen- a marked difference from lower-end iPhones.

Beyond just the iPhone family, the analyst likewise sees changes coming for the iPad Pro, which “could adopt a larger dot projector with increased VCSEL content and could also improve the speaker system with new four-channel MEMS speaker chipsets from AAC.”

On a final note, “Apple might work with Sony […] to develop a multi-array TOF for the rear camera in 2H19. We note that overheating and battery consumption are two bottlenecks for multi-array ToF adoption in the rear camera,” Zhang contends.

TipRanks highlights an analyst consensus tilted towards the bulls when it comes to the big AAPL machine’s market opportunity at play. Out of 29 analysts polled in the last 3 months, 16 are bullish on AAPL stock while 13 hedge their bets on the sidelines. With a return potential of nearly 8%, the stock’s consensus target price stands at $191.76.