Why Wall Street Is So Excited About Facebook Going Into Earnings

Facebook Inc. (NASDAQ: FB) is scheduled to release its fourth-quarter financial results after the markets close on Wednesday. The consensus estimates are calling for $2.53 in earnings per share (EPS) and $20.89 billion in revenue. The same period of last year reportedly had $2.38 in EPS and $16.91 billion in revenue.

Facebook continues to wrestle with the charge that people and foreign governments go on Facebook to lie about news, candidates and decisions that will drive the country’s future. Facebook says it has tried to help with the problem but that the number of posts on Facebook are in the hundreds of millions, or perhaps more, each day.

The social media giant also has had to fight off criticism that it is supportive of some dangerous comments as free speech. Politicians, for the most part, do not agree that free speech should contain lies meant to sway public opinion.

As the elections approach, Facebook will be under more scrutiny and likely will take more beatings from politicians, and its executives may have to make further appearances before Congress. Some will argue that Facebook should be broken into pieces. However, so far that does not look like Facebook’s eventual fate. It will remain a single, very powerful company.

Excluding Wednesday’s move, Facebook stock has outperformed the broad markets with a gain of about 48% in the past 52 weeks. In just the past quarter alone, the stock was up 16%.

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Here’s what analysts had to say about Facebook in the week leading up to the report:

• Raymond James has a Strong Buy rating with a $270 price target.
• Merrill Lynch reiterated a Buy rating with a $260 price target.
• Stifel maintained a Buy rating and a $250 target price.
• Credit Suisse maintained an Outperform rating with a $274 target.
• KeyBanc maintained an Overweight rating with a $263 price target.
• Pivotal Research maintained a Buy rating with a $245 target price.
• Morgan Stanley maintained an Overweight rating with a $270 price target.
• UBS maintained a Buy rating with a $250 price target.

Facebook stock traded up about 1% at $219.68 on Wednesday, in a 52-week range of $145.70 to $222.75. The consensus analyst price target is $249.15.

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