FB Stock: Traders Bet on a Facebook Earnings Spike

Facebook FB Stock

All eyes will be on Facebook Inc (NASDAQ:FB) after today’s close. Wall Street analysts are on average expecting the social networking giant to post $8.47 billion in sales for the fiscal quarter ending December 11/02/2016. This would show a 21.00% increase from the Q316 revenue of $7 billion, as well as an increase of 45.03% from the same period a year earlier. EPS in Q416 are expected to come in at $1.31, a growth rate of 65.82% from $0.79 per share year-on-year.

In the meantime, EarningsWhisper.com reports a whisper number of $1.37 per share.

As a quick reminder, Menlo Park reported Q316 EPS of $1.09, $0.12 better than the Street’s consensus estimate. Revenue increased 55.56% year-over-year (y/y), beating consensus by about $800 million vs. the $6.92 billion consensus.

While Facebook Street talk about concerns such as softer ad growth and revenue slowdown continue to persist, JPMorgan’s Doug Anmuth is sticking with his FB recommendation. In fact, he wrote in a recent note to clients that channel checks with marketers and agencies suggest “continued strong demand and no significant change in [Facebook’s growth] trajectory.”  The analyst, who reiterated an ‘overweight’ on the firm, also said that FB remains JPM’s “top large-cap pick.”

In addition, RBC Capital Markets analyst Mark Mahaney reiterated an ‘outperform’ rating and $170 price target on Facebook stock ahead Q4 earnings, saying he expects user growth to increase 16 percent to 1.81 billion, with engagement staying steady at 66%.

The overall logic of both analysis seems to be based on the fact that Facebook’s multiple avenues of growth are yet to be tapped or fully exploited. Speaking of new stream of revenue, The Wall Street Journal just reported that Facebook is working to develop a video-centric app for TV set-top boxes, giving it a home for video content as well as a new vehicle for video ads.

Facebook Share Performance/Valuation

The average volume for the $376 billion market cap company has been 18.3 million shares per day over the past 90 days. The equity has a beta of 0.66 and a short float of 0.94%. T-12 gross profit currently prints $15.1 billion. For full FY2015, Facebook raked in $17.93 billion in revenue — a spike of 44% y/y.

In the past 52 weeks, shares of Menlo Park, Calif.-based company have traded between a low of $96.82 and a high of $133.50. Ticker, which is currently trading below $132 level, is up 16.4% year-over-year, and 13.27% year-to-date.

Profitibility-wise, Facebook has a profit and operating margin of 30.4% and 43%, respectively. Trailing-12 revenue prints around $25 billion while return on equity is at 16%. There are currently 43 analysts covering the company. Of these, 39 have a ‘Buy’ recommendation while 3 rate it a ‘Hold’. Only one analyst rates the co. a ‘Sell’.

FB has a median Street price target of $155 with a high target of $180.

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About Ari Haruni 145 Articles
Ari Haruni is the Co-Founder & CEO of Wall Street Pit.

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