Media

Why Facebook Will Be One of the Biggest Earnings Reports This Week

Chris Lange

Published: July 22, 2019 1:05 pm

Last Updated: January 30, 2020 6:17 pm

Facebook Inc. (NASDAQ: FB) is scheduled to release its second-quarter financial results after the markets close on Wednesday. The consensus estimates are calling for $1.87 in earnings per share (EPS) and $16.51 billion in revenue. The same period of last year reportedly had $1.74 in EPS and $13.23 billion in revenue.

Although Facebook had a rough run in 2018 amid security breaches, congressional hearings and privacy issues, the company has done significantly better this year. In fact, recent reports of Facebook launching its own cryptocurrency based on blockchain technology have prompted analysts to take a closer look at the firm and what this could mean going forward.

Argus was one of the first to weigh in on Facebook. The independent research firm reiterated a Buy rating for the social media giant with a $220 price target, implying upside of roughly 17% from the most recent closing price.

In its report, Argus was quick to say that despite the challenging near-term outlook, the firm remains bullish on Facebook based on its position as the dominant social media site — a position again underscored by the company’s first-quarter results.

At this point, Argus believes the introduction of the new Libra cryptocurrency represents a significant product extension for Facebook that will enable it to diversify revenue away from advertising and leverage its large 2.4 billion user base into the digital/mobile payments business.

Separately, Facebook is also looking to lead the way through diversity. The social media giant recently announced that it will be making an effort over the next five years to double the number of female employees globally and to double the number of black and Hispanic employees in the United States.

Excluding Monday’s move, Facebook had outperformed the broad markets, with its stock up about 51% year to date. In the past 52 weeks, the stock was actually down about 5%.

A few other analysts weighed in on Facebook ahead of the results:

• Wedbush reiterated an Outperform rating and $220 price target.
• Deutsche Bank has a Buy rating with a $230 price target.
• Morgan Stanley has a Buy rating with a $220 target price.
• Goldman Sachs has a Buy rating and a $228 price target.
• Loop Capital has a Buy rating with a $225 price target.
• RBC has a Buy rating with a $250 target price.
• JPMorgan has a Buy rating with a $245 price target.

Shares of Facebook traded up about 1% at $200.77 on Monday, in a 52-week range of $123.02 to $218.62. The consensus price target is $222.97.