Facebook Exchange Not Growing as Fast as Expected (FB)

May 3, 2013 11:14 AM EDT Send to a Friend
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Price: $74.27 -2.1%

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    41 Buy, 8 Hold, 0 Sell

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Pivotal Research today maintained a Buy rating on Facebook (NASDAQ: FB) with a price target of $38.00. Comments follow the release of the company's 10-Q last night and 1Q13 earnings on Wednesday. Analyst Brian Wieser noted Facebook Exchange (FBX) results were not as strong as expected.

"As we noted after the release, FB's 1Q13 was solid vs. consensus, but not extraordinary, as our total advertising estimate was too high by $50mm. This gap between may have come from FBX rather than other products," said Wieser.

"Specifically, if FBX generated $65mm rather than the $115mm we expected, advertising would have been an exact match for us, indicating results were consistent with our view on the company. FBX revenues are very subjective because they are independent of the rest of Facebook's revenues today. In recent weeks we learned growth rates for some of FBX's primary buyers – agency trading desks – are lower than we thought (under 30% at each of Interpublic's Cadreon and WPP’s Xaxis) and so we surmise that perhaps FBX, while still growing fast, is not quite as large or fast-growing as we thought…yet. Still, while our expectations may have been ahead of themselves, FBX's potential is as positive as ever," concluded the analyst.

For an analyst ratings summary and ratings history on Facebook (NASDAQ: FB) click here. For more ratings news on Facebook click here.

Shares of Facebook closed at $28.97 yesterday.


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