Facebook Inc (NASDAQ:FB) is all set to release its earnings report for the first three months of 2013 on Wednesday afternoon, and analysts seem to be expecting solid numbers from the social networking company. Bank of America Corp (NYSE:BAC) analysts however, think that the second quarter of the year could be more difficult for the company.
The report, authored by analysts Justin Post and Joyce Tran, remains positive about Facebook Inc (NASDAQ:FB), and maintains a twelve month price target of $35 on the company’s stock. On today’s market, the firm’s stock stood at just over $27 per share. The analysts think that increasing mobile revenue, and solid revenue growth will strengthen the company’s results.
The problems, according to the analysts, could come in the second quarter of 2013, particularly if the company fails to ramp up mobile revenues as quickly as Wall Street would like. The Bank of America Corp (NYSE:BAC) analysts think that the firm’s mobile ambitions may have been conservative, and think that that might lead to problems for investors in the second quarter.
Facebook Inc (NASDAQ:FB) has looked good so far in 2013. The firm’s brand has remained popular among young users, and a Facebook redesign has drummed up more speculation that the firm may be ready to siphon traffic from specialty social networks like Yelp Inc (NYSE:YELP). For analysts, many of those maneuverings represent short term trends, and what investors want now is revenue expansion, and that means mobile.
We’ve already seen today how Facebook Inc (NASDAQ:FB) Monthly Average User figures are open to interpretation and manipulation. A perceived reduction in the popularity of the social network could cause an over-correction on the part of investors, who are familiar with the narrative of a quickly crumbling social network.
The Bank of America Corp (NYSE:BAC) analysts see the risks associated with Facebook Inc (NASDAQ:FB) stock, particularly the lack of detailed reports on usage from the company itself, and the firm’s current valuation. There is a large downside risk to Facebook Inc (NASDAQ:FB) stock, but the analysts believe the company will overcome current difficulties.
Facebook Inc (NASDAQ:FB) shares have lagged the market so far in 2013, adding just under 2 percent to their value since January 1. The company’s shares went public on May 15 last year at a price of $38. Even optimistic accounts, like that represented in this report, do not see the company returning to that value for a year or more.