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'Anticipate upside to Q3 results': Here's what 6 Wall Street analysts are saying about Facebook before its 3rd quarter earnings report

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  • Facebook is set to report third quarter earnings after the closing bell on Thursday.
  • Analysts will be looking out for the tech giant’s advertising revenue after many advertisers partially boycotted the platform this summer. Other investors are looking at Facebook’s monthly active users after lockdown restrictions eased over the summer. 
  • Here’s what six Wall Street analysts are saying ahead of the platform’s earnings report.
  • Watch Facebook trade live here. 
  • Visit Business Insider’s homepage for more stories.

Facebook is set to report third quarter earnings after the closing bell on Thursday.

Snap’s unexpectedly strong earnings results last week have raised Wall Street’s expectations for Facebook. Many analysts will be looking out for the tech giant’s advertising revenue after some advertisers partially boycotted the platform this summer. Other investors are looking at Facebook’s monthly active users after lockdown restrictions eased over the summer.

Shares of the tech giant slipped as much as 5% on Wednesday as Facebook CEO Mark Zuckerberg, Twitter CEO Jack Dorsey and Google CEO Sundar Pichai testified before a Senate panel regarding content moderation.

Here’s what six Wall Street analysts are saying ahead of Facebook’s earnings report. 

1. Bank of America

Price target: $335 

Rating: Buy 

“Expect a strong 3Q as the economy shifts online from offline,” said Bank of America’s Justin Post.

The firm estimates third quarter revenue of $20.18 billion versus the consensus $19.77 billion, and earnings-per-share of $1.99 versus the consensus $1.91 per share. 

“Our channel checks indicate advertisers turned ad spending back in 3Q with limited back-to-school impact from limited school reopening. Snap’s results suggest a strong online advertising rebound in 3Q,” he added.

Bank of America said Facebook’s new shopping content features including the Shop page on Facebook and shopping on Instagram’s IGTV will be an area of investor focus on Thursday’s call. 

2. Wedbush Securities 

Price target: $300 

Rating: Outperform

“Anticipate upside to Q3 results despite likely audience pull forward in 1H,” said Wedbush Securities’ Michael Pachter.

 “Facebook has consistently executed on its core business model and we expect the company to weather an advertising spending decline from a relatively better position than peers, given its tremendous scale and robust suite of tools to help advertisers manage costs and maximize ROI. User activity is clearly on the rise, the frequency of ad delivery has been ticking higher, and we expect Facebook to increasingly enable connections between its users and businesses wherever they access Facebook’s many services,” Pachter said. 

“That said, we remain concerned about Facebook’s prospects for the next quarter, at a minimum, given ongoing uncertainty around the macroeconomic environment, upcoming platform changes that will likely impact targeted advertising, and the duration of current advertising trends.”

3. JPMorgan

Price target: $315 

Rating: Overweight 

“Based on our investor conversations, we believe buyside expectations are now for mid-teens+ revenue growth for 3Q, with SNAP’s recent strength likely having raised the bar a bit,” Doug Anmuth of JPMorgan said.

“Facebook remains one of our top picks (along w/AMZN, PTON, & SNAP) & we raise our 3Q ad revenue estimate from $19.5B (+12% Y/Y growth) to $19.8B (+14% Y/Y).” 

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4. RBC Capital Markets 

Price target: $320 

Rating: Outperform 

“Political Ads could generate a material boost to North American Revenue in Q3 & Q4,” said Mark Mahaney.

“In Q3, we are estimating Y/Y MAU growth of 10% (from 12% in Q2) to 2.69B and a DAU/MAU ratio of 66.2%, down 3bps Y/Y. We view these estimates as reasonable given easing shelter in place restrictions vs. the peak in Q2.” 

5. Stifel 

Price target: $320 

Rating: Buy 

“Demand from digital advertisers recovered significantly in August and September according to numerous ad agencies and early earnings reports; we are raising our year over year revenue growth forecasts for Facebook by 2-3% over the next few quarters amid the more optimistic outlook for digital advertising growth,” Stifel’s John Egbert said.

“Audience growth may have cooled following a pull-forward of growth during the early months of the pandemic, but third-party data suggest Facebook’s engagement remained strong in 3Q and MAU additions may have done slightly better than the Street’s modest expectations.” 

6. CFRA Research 

Price Target: $240 

Rating: Hold 

“I would expect FB to beat consensus but perhaps not as big a topline beat as Snap, given that FB did see some ad spend directed away from it in July as many advertisers partially boycotted the platform, although that might be overwhelmed by ad overall spend heading faster to Internet and social media, especially Instagram as monetization there is picked up a lot,” CFRA’s John Freeman said. 

“I think Facebook still faces the most regulatory risk, maybe less under a Biden administration, but more than Google.” 

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