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Raymond James Bullish on Facebook (FB) Into Today's Q3 Print

October 28, 2014 8:00 AM EDT
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Price: $196.64 --0%

Rating Summary:
    46 Buy, 17 Hold, 2 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 13 | Down: 11 | New: 11
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Raymond James analyst Aaron Kessler reiterated an Outperform rating and placed his $80 price target on Facebook (NASDAQ: FB) under review ahead of Q3 earnings due after the close of trading today.

Kessler said 1) we expect solid results driven by mobile traction; 2) our analysis of traffic data indicates continued strength in engagement; 3) we expect upwardly revised consensus EPS estimates as we believe expense guidance remains conservative.

"Additionally, we believe Facebook's new initiatives (e.g., video, Instagram monetization, the Atlas ad platform) could drive upside to revenue estimates going forward," he said.

The firm estimates 3Q revenues of $3.07 billion (+52.5% y/y vs. +60.5 y/y in 2Q), in line with consensus. They estimate advertising revenues of $2.84 billion (+57.8% y/y vs. 67.4% y/y in 1Q) and payments/other revenues of $236 million (+8.4% y/y vs. +9.3% y/y in 2Q). Additionally, they estimate ad growth of 6% q/q, though they believe investor expectations are closer to 10% q/q. Additionally, they estimate mobile ad revenue of $1.88 billion (+113% y/y vs. 153% y/y in 2Q) and desktop ad revenue of ~$965 million (+5.3% y/y vs. 7.8% in 2Q). They estimate daily active users (DAUs) of 856 million (+17.4% y/y vs. +18.6% y/y in 2Q), adjusted EBITDA of $2.05 billion (+62.7% y/y vs. +92.3% y/y in 2Q), and non-GAAP EPS of $0.43 vs. consensus of $0.40.

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 $80.28 yesterday.



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