Facebook’s earnings report failed to impress investors last night, but analysts were quite happy with it, even though the social network missed revenue estimates. At least one firm has increased its price target for Facebook, but most generally agree that management is moving things along nicely.
RBC raises Facebook’s price target
In a report dated April 22, RBC Capital Markets analysts Mark Mahaney, Rohit Kulkarni and their teams said they raised their estimates for this year by about 5%. As a result, they also upped their price target, pushing it up from $88 to $105 per share and reiterating their Outperform rating on the social network.
They say Facebook posted some “very positive” fundamentals, with revenue growing 49% to $3.54 billion, missing the consensus estimate but betting RBC’s estimate of $3.37 billion. They believe foreign exchange headwinds resulted in the miss, particularly because Facebook reported a 55% increase in ad revenue, which they found “intrinsically impressive.”
Facebook riding high on mobile
The RBC team also liked the increase in mobile monthly active users, which increased 13%, a little better than they expected. Also 40% of the total only use Facebook on mobile devices. Further, they point out that the ratio of daily active users to monthly active users sped up again in all geographies, hitting a new high of 65% overall.
Mobile also made up 73% of Facebook’s total ad revenue, climbing 81% year over year. The RBC Capital team also commented on the growth in online video, of which they think Facebook may be the biggest beneficiary.
Facebook builds a family of apps
In their report also dated April 22, UBS analysts Eric Sheridan, Vishal Patel and Timothy Chiodo said they think Facebook is setting up to be a “product and revenue momentum story” for the second half of this year. They note that the social network’s ad revenues were better than expected even though the currency headwinds were strong.
Also they point out that the company now has five apps / services with more than 300 million monthly active users apiece. They think the decision to build a whole family of apps was the right one and that management is successfully executing their plan. The UBS team also thinks Facebook’s new app family “has set the standard for mobile time spent/ engagement.”
They see more catalysts for Facebook in the second half of this year through next year. As a result, they continue to rate the social network as a Buy with a $92 per share price target.
As of this writing, shares of Facebook were down 0.73% to $84.01 per share.