Facebook Inc (NASDAQ:FB) will report third quarter earnings tonight, and everyone wants to know: will the company beat expectations for mobile advertising again? Analysts are pretty positive heading into tonight’s report. BTIG analysts Richard Greenfield and Brandon Ross upgraded the stock to Buy and set a $68 per share price target. JPMorgan analyst Doug Anmuth and his team continue to rate Facebook as Overweight with a $53 per share price target.
Facebook upgraded by BTIG
Greenfield and Ross did have a Neutral rating on Facebook Inc (NASDAQ:FB), but they upgraded the stock on Tuesday because mobile advertising on the social network “has gotten notably better.” Also they say that at least for now, consumers don’t appear to be cutting back on their usage of the network because of the heavy ad load. In addition, they note that Instagram is a key asset and suggest that it could “redefine what advertising means,” especially for mobile devices.
For tonight’s report, they’re estimating earnings of 19 cents per share. For the full year, they’re estimating earnings of 75 cents per share on revenue of $7.586 billion.
Facebook data shows engagement remains strong
Anmuth and the rest of the JPMorgan team also note that users seem to be just as engaged as ever with Facebook Inc (NASDAQ:FB), so they reiterated their Overweight rating. They remain positive ahead of today’s earnings report because they believe “momentum around native advertising” is still building and that advertisers are continuing to see better and better returns on their investments using Facebook’s ad platform. For tonight’s report, they are estimated earnings of 20 cents per share.
Data from comScore indicated that Facebook’s share of total Internet minutes in the U.S. accelerated a bit to 24% year over year in September. That’s compared to 33% in August and 22% in July. During the third quarter, the social network’s total U.S. minutes increased 30% year over year, a 28% acceleration from the second quarter.
Over the last year, Facebook’s share of total minutes across both desktop and smartphones increased from 13.7% to 16.2%. Non-Facebook services, including Twitter, Snapchat and Facebook-owned Instagram, saw their total minutes increase from 1.7% to 2.4%. During September, Facebook’s share fell about 12 basis points quarter over quarter, although competing services saw their share fall even further, by 19 basis points.
The JPMorgan analysts say there’s upside potential to their 10% sequential ad revenue growth and $842 million in mobile ad revenue. They also see more potential for upside again in the December quarter because they believe Facebook Inc (NASDAQ:FB) expanded its advertiser base during the September quarter. They saw “a notable pick-up” in Entertainment industry ads, including TV shows, movies, and console games.
