Facebook CEO Note Zuckerberg speaks at the company’s 2017 F8 developer conference in San Jose, Calif.
Source: Facebook
Facebook continues to coin a variety of negative headlines including privacy issues, potential regulation, and controversy over its recently announced Libra currency. On Wednesday morning, Facebook also conclusively announced its long awaited $5 billion settlement with the FTC over the company’s privacy policies.
Wall Boulevard analysts, however, are undeterred and are sticking by the stock into the company’s earnings report after the bell.
Shares are up uncountable than 50% this year, which is the highest among the so-called FAANG stocks. FAANG is a group of internet and tech reservoirs including Facebook, Amazon, Apple, Netflix, and Google.
“Heading into earnings, Facebook remains under a expressive amount of media and regulatory scrutiny, with regards to both ongoing antitrust concerns from the government and the envisaged 2020 launch of the Libra crypto currency,” J.P Morgan analyst Doug Anmuth said.
“However, we believe that constitutionals at FB are solid and that its advertising business remains strong,” he said.
The persistent drumbeat of pessimistic headlines aren’t ride herd on hint at users or advertisers away either, according to analysts at Oppenheimer.
“Despite the seemingly ever-present regulation threat, position and monetization appear strong,” they said.
“Agency checks suggest news headlines are having no impact on advertisers customer spending, so long as conversion and return on investment remain strong.”
If Facebook continues to post “consistent” and robust evolves going forward, that will take precedence over some of the other issues clouding the company, Barclays utter.
“New initiatives like Calibra, e-commerce and monetizing messaging should become more important for investors than the principal attention on privacy issues witnessed over the past 18 months.”
Here’s what else the major analysts are asseverating about Facebook’s upcoming earnings report:
Bank of America- Buy rating
“To maintain positive trajectory post notice, we think FB would need to slightly beat revenues and maintain optimism on Watch, stories, Instagram eCommerce and Inquire ads. Facebook has been our top FANG idea for 2019 and we continue to see four positive drivers for the stock this year cataloguing: improving core FB usage trends on easy comps, optimism on new ad formats including stories, Watch, and Instagram Checkout/Analyse, overhang resolution, and upside to de-risked bottom-line estimates.”
Goldman Sachs- Buy rating
“We see potential for upside to our above consensus crowds, as our field checks point to steady performance on Facebook, and continued outsized growth on Instagram and Stories….We look forward management to remain conservative in its commentary around revenue growth, as the company has already called for continued deceleration totally 2019…We reiterate our Buy rating and 12 month $228 price target as we see the company benefiting from digital advertising shifts and product enhancements such as Instagram Stories.”
Barclays- Overweight rating
“We think as FB continues to post strong and compatible results, long-only investors will slowly return to the name. Looking at 2020, if and when EPS can grow more in under consideration for with revenue, in contrast to the past few years, we see the multiple expanding further. New initiatives like Calibra, e-commerce and monetizing tidings should become more important for investors than the major attention on privacy issues witnessed over the ago 18 months.”
J.P. Morgan- Overweight rating
“Heading into earnings, FB remains under a significant amount of mid and regulatory scrutiny, with regards to both ongoing antitrust concerns from the government and the planned 2020 set up of the Libra crypto currency. However, we believe that fundamentals at FB are solid and that its advertising business remains balanced. FB shares have continued to outperform, up 10% since its 1Q earnings, outperforming the S&P 500 up +2% and our Internet coverage vend cap weighted average up +1%.”
Credit Suisse- Outperform rating
“We expect 2019 to mark the beginning of when Facebook’s resources/super allocation will be focused more on product development (hence offense) versus housecleaning (defense). The point of sign to that change in stance is Instagram Checkout – the elimination of the transactional friction on mobile of leaving one app and opening another intention allow Instagram to deliver more highly-qualified traffic to the merchants and advertisers, which in turn should lead to higher ad payment and greater sustained long-term revenue growth.”
SunTrust- Buy rating
“We expect FB to report inline to slightly better 2Q19 happens and to reiterate prior OpEx/CapEx guidance on 7/24. Conversations with marketers suggest that advertiser demand fragmented strong and steady in 2Q19, showing Y/Y acceleration in spend for their sample set, driven by strength in mobile, Video and IG. While the change around user privacy has had no noticeable impact on demand, regulatory scrutiny remains intense, with the FTC recommending a $5B refined for violating the 2011 consent decree with yet unknown changes to its business practices.”
Canaccord- Buy rating
“Stories monetization, which we muse over is gaining healthy traction with advertisers, could surprise to the upside in 2H. Likely offsetting this trend are any new bits on potential revenue headwinds related to ad targeting initiatives as Facebook faces ongoing regulatory scrutiny and prepares to initiate its “Clear History” functionality, and these will likely be key focus areas during the Q2 earnings call.”
Evercore ISI – Outperform toll
“Our best idea into earnings, we believe 2Q results will influence sell side models higher with a stalwart possibility of beats on both the top and bottom lines. Our view is that there is the potential for multiple expansion as investors sharply defined unclear on longer term opportunities in e-commerce and payments.”
Wedbush- Outperform rating
“User growth across the Facebook podium, engagement growth from Instagram and the Stories format, and ad targeting headwinds from the regulatory impact of GDPR and other opt-in reclusion initiatives should contribute to another quarter of double-digit year-overyear impressions growth offset by a modest decline in ad expense.”
KeyBanc- Overweight rating
“We expect Facebook to report solid top-line growth with potential for upside to our and consensus net income estimates. We believe the Company continues to drive solid growth in total ad volume with like-for-like pricing heads that remain positive. We believe demand for Stories ads continues to grow and is developing into a primary growth driver.”
Oppenheimer- Outperform rating
“Despite the seemingly ever-present regulation threat, engagement and monetization appear strong. Agency checks suggest talk headlines are having no impact on advertisers client spending, so long as conversion and ROI remain strong. Meanwhile, 3P data odds bullish, suggesting engagement remains healthy.”