Earnings season is here. And that means the biggest players in the market are getting ready to release very important earnings reports. One of those big players is Facebook (FB). The social media giant is set to report third-quarter numbers after the bell on Tuesday, October 30.
To help you prepare, here is what Stifel’s top analyst Scott Devitt is expecting ahead of the print: “We forecast 3Q revenue to increase +33% y/y to ~$13.74B, with ad revenue increasing +34% y/y. Last quarter FX-adj. ad revenue grew +38% y/y, with reported revenue growth benefiting from a ~400bp FX tailwind. We expect an approximate 300bp FX headwind to ad revenue growth this quarter and in 4Q based on current rates. Our 3Q / 2018 / 2019 Instagram revenue estimates are $2.33B (+85% y/y) / $9.65B (+98% y/y, ~18% of total ad revenue) / $13.49B (+40% y/y, ~20% of total ad revenue) as engagement continues to accrue to the platform. We expect Facebook impression growth of +23% y/y in 3Q, from +21% y/y in 2Q and +8% y/y in 1Q; the primary drivers of impression growth continue to be lapping RHC roll-off and Instagram impression growth in both the main feed and Stories.”
The analyst concluded, “Existential questions around user growth maturation, revenue deceleration, and core platform durability hit the mainstream following last quarter’s outlook. While we recognize these concerns are relevant, we view the risk as reflected at current levels with shares trading at 16x 2020 GAAP EPS ex-cash on “de-risked” estimates versus prior to 2Q.”
Bottom line: Devitt reiterates a Buy rating on FB stock with a price target of $202, which represents a potential upside of 31% from where the stock is currently trading.
Investors who listened to Scott Devitt over the past year have made 20.8% on their Devitt bets, according to TipRanks. The analyst holds a 67% success rate and is ranked #63 out of 4893 analysts.
Overall, the social media empire remains a Wall Street darling, as TipRanks analytics showcasing FB as a Strong Buy. With an average price target of $204.32, analysts are predicting massive upside potential of 32% for the stock. In total, Facebook stock has received 33 ‘buy’ ratings vs. just 6 ‘hold’ and 1 ‘sell’ ratings in the last three months. (See FB’s price targets and analyst ratings on TipRanks)