Deutsche Bank Starts Facebook (FB) at Hold, Valuation an Issue

September 21, 2012 9:10 AM EDT
Get Alerts FB Hot Sheet
Price: $127.04 -0.4%

Rating Summary:
    49 Buy, 8 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 30 | Down: 30 | New: 23
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Deutsche Bank initiated coverage on Facebook (NASDAQ: FB) with a Hold rating and a price target of $22.00.

FB is becoming increasingly central to many users’ and businesses’ core experience on the Internet, noted the report.

“An entire ecosystem of new distribution using social tools from Facebook is changing the way brands and users find each other and communicate, and FB has yet to fully leverage its position,” said analyst Ross Sandler.

“We believe FB is poised to re-accelerate ad revenue growth in 2H12 on the back of Sponsored Stories in News Feed, which we estimate is running well above the $1m daily run rate called out in 2Q12. This ad unit appears to be a game-changer for FB, as it ports nicely to mobile, has higher advertiser ROI than right-rail, and should allow FB to increase impression and eCPM growth.”

However, analyst optimism is weighed down by the lofty valuation of 37x 2013E consensus EPS, and it may take more evidence before they turn bullish.

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 $22.59 yesterday.

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