by winston » Fri Nov 29, 2019 8:25 pm
not vested
Facebook (FB)
The early innovator in social media, Facebook is familiar to all of us. The company is coming off of a difficult couple of years – its tale of woe made headlines around the world as it dealt with a series of major customer data privacy scandals.
CEO Mark Zuckerberg’s attempts to finesse matters usually made them worse, and he was called to task by the Feds, testifying before Congress and paying a record-breaking $5 billion fine to the FCC.
The problems may be behind Facebook, at least for now. The company took a heavy hit to quarterly earnings earlier this year, when it paid the FCC fine in cash, but tech industry analysts took note of that, too.
Facebook had the resources to pony up $5 billion and shrug it off. It was a graphic reminder that this company, even when facing ongoing PR disasters and declining share prices, was still grossing $55 billion annually.
A few numbers will show how Facebook as recovered. The stock is up 63% from is trough last December, and while it has not quite regained its all-time high level, it is within $15 of it. After the losses of 1H19, the company saw an earnings beat in Q3 and rising estimates for Q4. In short, Facebook has weathered a storm.
Wall Street’s analysts would agree. Lloyd Walmsley, 5-star analyst with Deutsche Bank, wrote at the end of last month, “We come away from Facebook 3Q earnings with increased confidence around engagement in the core Facebook app, prospects for stable revenue growth in 2020, and in the medium term operating and free cash flow margins. FB delivered better than expected 3Q revenue, a lower-than-feared 2020 opex and capex outlook, and gave us comfort that the business can see stable revenue growth in 2020.”
Walmsley raised his price target by 13%, to $260, showing that he sees a 28% upside to FB over the next 12 months.
Writing from Morgan Stanley, Brian Nowak also raised his price target. He was especially cognizant of Facebook’s forward going profit potential, pointing out that the company has multiple apps, that the user base is still growing every quarter, and that marketers and advertisers are creating in tapping new modes of monetization.
He wrote, to support his Buy rating, “We see the monetization roll-out of Instagram adding ~$16bn of incremental ad revenue in 2019. We are also positive on FB's ability to continue to innovate and improve its monetization... Combined with high and growing engagement we see monetization upside going forward.” Nowak’s new $250 price target implies an upside potential of 23%.
Like the other stocks in this article, Facebook has a Strong Buy consensus – and it is based on an impressive 26 buy ratings given in recent weeks. There are 3 Holds and 1 Sell in the mix, as well, reminders of the company’s recent difficulties, but it’s clear that most analysts are bullish on FB.
The shares have an average price target of $235, suggesting a 16% upside from the $202 current trading price.
Source: TipRanks
It's all about "how much you made when you were right" & "how little you lost when you were wrong"