Raymond James Upgrades Facebook (FB) to Strong Buy on Positive Checks, Attractive Risk/Reward

(Updated - January 13, 2017 7:41 AM EST)

Raymond James upgraded Facebook (NASDAQ: FB) from Outperform to Strong Buy with a price target of $160.00.

Analyst Aaron Kessler comments "We upgrade shares of Facebook to Strong Buy (from Outperform) given: 1) 4Q checks are positive and show continued momentum in 4Q; 2) we believe FB can continue to report upside to consensus estimates in 2017 despite some debate around ad load growth and expense growth; 3) we believe risk/reward is attractive with shares trading at ~24x/19x our 2016/2017 non-GAAP EPS (vs. expected 25% EPS CAGR). We maintain our $160 PT (30x 2017 non-GAAP EPS)."

Kessler further clarifies on expense guidance, saying "We believe Street estimates, which call for ~41% operating expense growth, are reasonable and would note over the last three years, FB non-GAAP operating expense growth has come in ~7.5%, 9%, and 8.5% below original guidance (at midpoint). We have increased our expense growth modestly for 2017 though are still below consensus (34% vs. 41%)."

Lastly, Kessler says that based on proprietary checks he remains comfortable with Q4 ad revenue estimates $8.2B/$8.3B or 45%/47% year-over-year growth.

For an analyst ratings summary and ratings history on Facebook click here. For more ratings news on Facebook click here.

Shares of Facebook closed at $126.62 yesterday.

You May Also Be Interested In

• Wells Fargo Upgrades Kroger (KR) to Overweight, 'Building Catalysts Point to Attractive Stock Setup'
• ServiceNow (NOW) PT Raised to $900 at Wells Fargo
• UBS Upgrades TD Synnex (SNX) to Buy, 'Improving outlook & removal of share overhang to drive a re-rating'