Wall Street hasn’t been able to get enough of Facebook, Inc. (NASDAQ:FB) stock for years, and as a result, analysts have been boosting their price targets on a regular basis, often around earnings releases. We’re probably three to four weeks away from the social media firm’s next earnings release, and already we’re getting a batch of price target increases for Facebook, Inc. (FB) stock. The pair of reports boosted the social media firm’s shares to a new high in early trading.
Facebook, Inc. (FB) stock price target set to $232 by CS
In a note on Monday, Credit Suisse analyst Stephen Ju reiterated his Outperform rating and said that he has bumped up his price target for Facebook, Inc. (FB) stock by $2 to $232 per share. His higher price target is the result of increasing his fiscal 2018 earnings per share estimate from $6.50 to $6.86 per share. He added that he tweaked his mobile newsfeed estimates higher due to positive checks with advertisers.
Ju said that investors have been asking him about what could be “ailing” Facebook, Inc. (FB) stock, and his answer has been capital expenditures. Management guided for capex at $14 billion for fiscal 2018, which is about double what it was last year. This will have serious implications for free cash flow growth in 2018.
Buyers of Facebook, Inc. (FB) stock into investment
He recalled the pressure Alphabet stock experienced when the company did the same thing in mid-2013. However, he also said that he doesn’t expect the pressure on Facebook, Inc. (FB) stock to continue. He noted that the company tends to offer very clear guidance. He believes that in the worst-case scenario, the earnings call for the third quarter of fiscal 2018 could serve as a sort of “clearing event” because he doesn’t expect fiscal 2019 to bring an increase of the same magnitude.
The Credit Suisse analyst sees an expansion of the company’s total addressable market in the long term which could bring it as high as $1 trillion. As a result, he remains buyers of Facebook Inc (FB) stock into this year of investment. He continues to expect the company to drive long-term revenue growth even without increasing ad loads significantly, citing Instagram, Premium Video ads and Dynamic Product Ads as drivers of this growth in the near term.
He also believes that the Street continues to underestimate future new products’ monetization potential in the long term and sees the potential for upward bias to estimates, which he said don’t factor in other products like WhatsApp and Messenger.
JPMorgan also boosts target for Facebook stock
JPMorgan analyst Doug Anmuth also raised his price target for Facebook, Inc. (FB) stock on Monday, bumping it up from $225 to $230 per share. He reiterated his Overweight rating and described Facebook, Inc. (FB) stock as a “best idea” for this year. He believes user engagement will continue to be strong and also cited Instagram as a key driver of growth this year. In fact, he believes Instagram could even double from where it currently stands.
Facebook Inc (FB) stock ticked higher by about 1% on Monday, hitting a new record high of $188.90 in intraday trading.