Facebook (FB) PT Lifted to $37 at Needham & Company

Needham & Company analyst Laura Martin raised her price target on Facebook (NASDAQ: FB) from $33 to $37 following Q2 earnings, saying momentum is accelerating.

"FB exceeded estimates, reporting 2Q13 revenue of $1.8B (up 53% y/y and 13% above our estimates), and Non-GAAP EPS of $0.19 (up 62% y/y and 54% above our estimate). The most important points (our view) from the management call included:"

1. Mobile. Proof of mobile monetization is a key value driver for Internet companies, in our view. In 2Q13, FB reported that 40% of its total revenue (up from 30% in 1Q13) came from mobile. Mobile monthly active users (MAUs) were 819mm (up 51% y/y), about 70% of total FB MAUs, suggesting continued upside to monetization.

2. What’s Different about FB?
• Capital Efficiency. EBITDA margins rose 220 basis points q/q (to 56%) and FB lowered its CapX guidance to $1.6B (down from $1.8B), despite a faster-growing income statement than expected.
• Pricing Power. Ad impressions grew 43% y/y in 2Q, with price per ad impression up 13%, accelerating vs the 39% impression growth and 3% pricing growing reported in 1Q13. Price increases in the US and Canada averaged over 40% y/y in 2Q13.

3. Usage. Daily active users (DAUs) were 699 million in June 2013, up 27% y/y and MAUs were 1.15B, also up 21% y/y implying improving usage trends globally. Specifically, FB mentioned flat teen usage y/y.

The firm raised FY 2013 EPS from $0.61 to $0.68 and set FY 2014 EPS at $0.79.

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 $26.51 yesterday.

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