Facebook (FB) PT Raised to $170 at Credit Suisse
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Credit Suisse analyst Stephen Ju previewed Q3 on Facebook (NASDAQ: FB) and raised his price target to $170.00 (from $154.00) as they roll forward valuation parameters to contemplate end-of-2017. The firm maintained an Outperform rating.
Ju commented, "FB shares are currently trading at 25x and 20x our 2017 and 2018 earnings estimates respectively – this is versus our expectation of 26% EPS CAGR over the next five years, as investors overcome concerns around tougher comparisons beginning in 4Q16 and moderation of ad load growth. While the former is a mathematic reality, we expect the latter to become less of a concern as FB has in the past has reported varying growth rates for both impressions and price as it has taken steps to modify existing ad units and release new products. Additionally, we believe Facebook is taking steps to introduce a new prospecting product to help advertisers find new customers as well as to monetize Messenger in early-2017. Hence with FB shares having fallen relatively out of favor, we remain buyers as we believe the Street is not only undermodeling Instagram near term, but also not yet assigning additional optionality to the eventual monetization of Messenger and WhatsApp. Our overall investment thesis on FB shares remains unchanged: 1) Facebook will be able to drive long term revenue growth without a material lift in ad loads - near-term drivers include Instagram, Premium Video, and Dynamic Product Ads, 2) Street models continue to underestimate the long-term monetization potential of upcoming new products, 3) optionality and upward bias to estimates, which do not contemplate contributions from multiple other products including WhatsApp, Messenger, and Offers/Local."
Shares of Facebook closed at $127.88 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS View, Analyst PT Change
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