Facebook (FB) Price Target Hiked to $102 at Credit Suisse; Adds Facebook Audience Network to Model
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Credit Suisse analyst Stephen Ju reiterated an Outperform rating and boosted his price target on Facebook (NASDAQ: FB) to $102.00 (from $88.00) after making a number of changes to estimates as they layer in contribution from Facebook's new mobile ad network, push out Graph Search and update FX. The price target increases as they roll forward valuation parameters to use 2015 estimates.
Commenting on layering in Facebook Audience Network (FAN) revenue contribution, Ju explains, "While it was not part of our original model build out, the need to incorporate FAN into the analysis took on an increased urgency for us especially in the context of management's 2015 operating expense guidance first offered on the 3Q14 earnings conference call. Given that the company will disclose FAN revenue on a gross basis and likely incorporate publisher revenue share payout (or TAC) into COGS, it does after all explain some but not all of the 50%-70% non-GAAP OpEx growth guidance for 2015."
The firm maintains their Outperform rating based on our product-by-product approach to forecasting which leads them to believe: 1) Facebook will be able to drive revenue growth without a material lift in ad loads, 2) Street models are too conservative and underestimate the long-term monetization potential of upcoming new products, 3) optionality and upward bias to estimates do not contemplate contributions from multiple other products.
Shares of Facebook closed at $76.45 yesterday.
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