Facebook (FB) PT Raised to $155 at Macquarie

Macquarie analyst Ben Schachter reiterated an Outperform rating and raised his price target on Facebook (NASDAQ: FB) to $155.00 (from $150.00) following strong Q2 results.

Schachter commented, "When FB first went public, we said that as long as the audience is there, FB will find ways to make money. Years later, the audience is still there (and, remarkably, still growing) and FB is still making money (much, much more than expected). We expect this theme to continue. Revenue growth was better than expected, driven by ad pricing, impressions, better analytics, and ever-improving targeting and formats. Ad load will slow from here, but we expect FB will continue to innovate on ads and newer revenue drivers over time. Additionally, margins remain very strong and the guidance is for lower than expected opex growth.

And while the core ad model continues to perform much better than expected, we continue to like the stock, in large part, because beyond the extraordinary performance of the core, there remains a number of potentially very large known future opportunities, including: messaging, search, FAN, VR, and video."

Key Positives in the Quarter

1) Rev growth accelerated one point to 59% y/y

2) 69% y/y U.S. ad growth best since 1Q’14

3) Adj. EBIT margin of 59% best non-4Q margin since 3Q‘14

4) Opex Guidance better than expected

5) Much discussion about future opportunities and video-first initiatives

6) MAU y/y growth best since 1Q’14

Key Concerns in the Quarter

1) Peak rev growth? We, and we expect investors, will assume 2Q’16 is the peak

2) Guidance that ad load will impact rev growth going forward

3) Timing and size of messaging and search monetization still unclear

4) North America and Europe DAU/MAU fell 50bps and 22bps, respectively. Too small for a trend, but Snapchat bulls may call the start of engagement declines

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 $123.34 yesterday.

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