Facebook Inc (NASDAQ:FB) will be reporting its fourth quarter results on January 29. Wall Street expects the social networking giant’s Q4 revenue to come in at $2.1 billion. But Deutsche Bank analysts Ross Sandler and Lloyd Walmsley said in a research note that Facebook Inc (NASDAQ:FB) is well-positioned to beat the consensus. Compared to the third quarter, market sentiment is more balanced this time, which may be the next catalyst for the stock. Analysts said Facebook Inc (NASDAQ:FB) ad revenue would be at least $100 million above the consensus.


Facebook has a multi-year growth opportunity

As more users access the network through mobile, engagement has seen substantial improvement. According to a survey, Asian users who access the site via mobile use Facebook Inc (NASDAQ:FB) at least five times per day. Deutsche Bank said its checks suggest that monetization is growing rapidly on all fronts. Today, only 507 million of its more than 1.2 billion users access the network on mobile every day. Facebook Inc (NASDAQ:FB) has a multi-year growth opportunity as more users shift to mobile.

Recently, Facebook Inc (NASDAQ:FB) made several changes to its Newsfeed to give more attention to better performing posts. Improving the Newsfeed is an important area, as it determines the user engagement level. Moreover, Facebook Inc (NASDAQ:FB) recently changed the way it reports the number of active small and mid-size business using the social network. The new methodology also includes businesses that don’t have a physical location such as online service providers and e-commerce firms. Using the new method, Facebook Inc (NASDAQ:FB) said there are 25 million SMBs that have an active Facebook page. The figure was 20 million at the end of Q3, and just 15 million in April, 2013. Most importantly, more than one million of these SMBs are active advertisers on the network.

Facebook’s three-pronged strategy

Deutsche Bank analysts said most of the upside will be driven by Facebook Inc (NASDAQ:FB)’s three important initiatives, FBX, Custom Audiences and App Installs. App Installs alone is expected to generate more than $250 million in Q4. Meanwhile, Instagram may generate upward of $500 million. Facebook Inc. (NASDAQ:FB) is expected to push further into graph search for smartphones, and it will keep refining mobile ad products.

Deutsche Bank expects Facebook Inc (NASDAQ:FB) to report 25 cents in earnings based on EBITDA of $1.46 billion and 40% tax rate. The research firm has a Buy rating on the stock with $61 price target.

Facebook Inc (NASDAQ:FB) shares gained 0.31% to $58.41 in pre-market trading Thursday.