With Facebook (FB) set to release earnings on July 24th, what should investors expect?
The social media giant made headlines for both positive and negative reasons over the past few months. For one, Facebook announced Libra, its cryptocurrency, which will be used by Facebook users to send money to one another, and pay for goods and services purchased on the platform. The jury is still out on how it will help revenue, but many are optimistic that in the long term, it’s a bonus. But in the short term, the company is facing a $5 billion fine recently levied by the FTC for privacy violations. This isn’t a total surprise for most, but it does pay a role moving forward as privacy has become an increased concern for lawmakers. That said, analyst Brian White of Monness doesn’t see the fine as a major challenge, as he maintains a Buy rating on FB stock and $250 price target, which implies nearly 22% upside from current levels.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Brian White has a yearly average return of 27.8% and a 79% success rate. White has an average return of 16% when recommending Facebook and is ranked #9 out of 5,244 analysts.
Looking to earnings, White believes Facebook will at least meet his 2Q:19 revenue projection of $16.44 billion (up 24% YoY; Street is at $16.51 billion) and exceed his EPS estimate of $1.82 (Street at $1.87). White’s 24% YoY revenue growth projection for 2Q:19 represents a sharp deceleration from the 42% growth delivered in 2Q:18. Looking ahead, White’s 2Q:19 forecast calls for advertising revenue of $16.29 billion (up 25% YoY) and Payments & Other Fees revenue of $148.4 million (down 23%). Looking ahead, for 3Q:19, Whit is projecting sales of $16.92 billion (up 23%; Street is at $17.05 billion) with EPS of $1.83 (Street is at $1.85).
Overall, the analyst says Facebook has found success even as it faced headwinds, including a “steady stream of negative news…[as well as] growing scrutiny by U.S. politicians (and in Europe).” And while the company is expected to face Congress today, the analyst notes that Facebook “has stayed the course, [including outlining] new privacy initiatives and [remaining] innovative.”
Facebook is a Wall Street favorite, even if the government is a bit less enthused. TipRanks analysis of 39 analysts shows a consensus Strong Buy, with 35 saying Buy, while only four suggest Hold. The average price target among these analysts stands at $222.34, which implies nearly 10% upside from current level. (See FB’s price targets and analyst ratings on TipRanks)