Media

Why Analysts Are Cautiously Optimistic on Facebook After Earnings

Chris Lange

Published: October 31, 2019 12:15 pm

Last Updated: January 30, 2020 1:43 pm

Facebook Inc. (NASDAQ: FB) released its third-quarter 2019 earnings results after markets closed Wednesday. Overall, this was a fairly positive report, with solid top-line and bottom-line beats, and investors reacted in kind, sending shares higher. On the analyst front, most were positive, but there were a few that are still not entirely convinced.

24/7 Wall St. has included some brief highlights from the earnings report, as well as what analysts said after the fact.

For the quarter, the social media company posted diluted earnings per share (EPS) of $2.12 on revenues of $17.65 billion. In the same period a year ago, the company reported EPS of $1.76 on revenues of $13.73 billion. Third-quarter results also compare to consensus estimates for EPS of $1.91 EPS and $17.37 billion in revenues.

The number of daily active users rose 9% year over year to 1.62 billion in September, and the monthly active user total rose 8% to 2.45 billion.

Mobile advertising revenue represented approximately 94% of advertising revenue for the quarter, up from about 92% of advertising revenue in the year-ago third quarter.

Here’s what analysts had to say:

• Barclays reiterated an Overweight rating and cut its price target to $220 from $240.
• Mizuho reiterated a Buy rating and cut its price target from $247 to $240.
• BMO Capital Markets reiterated it as Market Perform and cut its target to $185 from $197.
• SunTrust Robinson Humphrey reiterated it as Buy and raised its target to $250 from $235.
• Credit Suisse reiterated it as Outperform and raised its price target from $260 to $270.
• Wedbush reiterated an Outperform rating but cut its target price to $250 from $265.
• UBS reiterated a Buy rating and cut its price target from $240 to $235.
• Morgan Stanley reiterated it as Overweight and raised its target to $250 from $235.
• Nomura reiterated a Buy rating and raised its price target to $253 from $235.
• Stifel reiterated a Hold rating and raised its price target to $205 from $180.

Shares of Facebook traded up about 3% on Thursday to $194.00, in a 52-week range of $123.02 to $208.66. The consensus price target is $236.49.