JMP Securities analysts have joined a band wagon of other analysts lowering Facebook Inc. (NASDAQ:FB) stock price target ahead of Q3 results. The social media giant was recently downgraded by, BTIG media to a sell recommendation, with a price target of $16 per share, while yesterday, Arvind Bhatia, of Sterne Agee, a sell side brokerage firm, lowered its price target on the stock to $26, despite maintaining a Buy recommendation. JMP Securities LLC, has set a price target of $30 per share, citing risks associated with revenue from Zynga Inc. (NASDAQ:ZNGA) as a major reason.
JMP securities, has lowered its estimates for Facebook Inc. (NASDAQ:FB) results for Q3, just a few days before the company announces its earnings. JMP now expects Facebook’s revenue to be in the range of $1.254 billion, as compared to the initial estimate of ~$1.294 billion.
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Subsequently, the social networking giant’s advertising revenues has been revised to $1.067 billion, as compared to ~$1.091 billion, whereas payments revenue, which largely originates from Zynga Inc. (NASDAQ:ZNGA) are now estimated at $187 million, down from ~$203 million. The securities firm also revised the company’s earnings per share to $0.12 from $0.13.
Active users stats have also been trimmed to 583.2 million and 998 million, down from 598.6 million and 1.026 billion; for the daily and monthly estimates respectively. Nonetheless, the firm has maintained its outperform rating for the stock ahead of Q3 earnings results.
The analysts said, “our downward revisions are based on both ZNGA’s (MO, $3 PT) pre-announced, lower than expected bookings, as well as ComScore data, which showed that PC-based MAU growth is declining, making it all the more important for FB to accelerate its mobile ad initiatives”.
“Despite the high level of negative sentiment, we believe that, at $18.98 per share, FB’s user-base and potential mobile, search, app exchange, and ad-network revenue opportunities are undervalued,” the analysts added.
The analysts said that, it is important for Facebook to ramp its mobile ad monetization campaign, as recent results indicated a paradigm shift from the web based platform to the mobile platform. The mobile platform of the social networking company tallied 600 million monthly active users in September.
Additionally, the analysts note that, it is likely that most of the MAUs increase reported recently by CEO of the company, Mark Zuckerberg, originated from the emerging markets and Asia, where ad revenue is cheaply priced, as compared to the U.S.