What to Expect From Facebook Earnings

Facebook Inc. (NASDAQ: FB) is scheduled to report its fourth quarter financial results after the markets closed on Wednesday. The consensus estimates from Thomson Reuters call for $0.68 in earnings per share (EPS) on $5.37 billion in revenue. The same period from last year had $0.54 in EPS on $3.85 billion in revenue.

The huge social media leader posted gigantic third-quarter numbers that truly blew most of Wall Street away. Facebook has Instagram, for which some analysts have projected revenues tripling in 2017 from 2016, as well as Premium Video and Graph Search capabilities to strengthen the social media giant’s earnings flow.

Some analysts feel that Facebook can drive revenue growth even without a huge increase in advertising placement. Facebook and Instagram account for 5% of users total media time, but the company doesn’t come close to capturing 5% of total advertising budgets. SunTrust Robinson Humphrey notes that the company has a billion daily users that devote 20% of time spent on mobile devices to the platform.

Most Wall Street analysts point to the fact that Facebook remains the top beneficiary of the adoption of mobile Internet trends, with total U.S. Internet time spent on Facebook and Messenger. Other metrics continue to explode, and the key is no viable challengers are anywhere in sight. Positive monthly data use, easier growth comparisons and positive data on ad revenue drivers are the top catalysts.
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A few analysts weighed in on Facebook prior to the earnings report:

• Sanford Bernstein reiterated a Market Perform rating with a $134 price target.
• Morgan Stanley reiterated an Overweight rating with a $130 price target.
• Cantor Fitzgerald reiterated a Buy rating with a $125 price target.
• FBR reiterated an Outperform rating with a $125 price target.
• RBC Capital reiterated a Buy rating with a $130 price target.

So far in 2016, Facebook has been more or less in line with the broad markets, with the stock down 7% year to date. However, over the past 52 weeks the stock is in fact up about 25%.

Shares of Facebook were trading at $97.64 on Wednesday, with a consensus analyst price target of $72.00 and a 52-week trading range of $72.00 to $110.65.