Facebook New Ads Could Earn $6.7B In 2013: Raymond James

Facebook Inc. (NASDAQ:FB) earnings are on the way this week, and the buzz around the report is growing exponentially louder. Analysts studying the business are starting to increase their estimations of the firm’s future as its stock price rises, and monetization plans look more promising.

According to a new report from Raymond James, the company’s new ad formats should boost 2013 revenue to 6.7 billion.

Facebook New Ads Could Earn $6.7B In 2013: Raymond James

The report concentrates on the effects of the company’s new advertising tools on its expected future revenue and earnings. According to the report, the major drivers of the company’s revenue growth are an increase in monetization from its mobile service, the beginnings of revenue from new ad formats, and its international performance.

While advertising looks like a growing source of revenue for the company, its other revenue streams are looking less fertile. The firm’s payments, stemming mostly from social gaming, are expected to come in at a reasonable $215 billion, but growth in the area is unpredictable according to the analysis. That leaves the analysts’ estimation of those revenues flat for the year ahead.

Facebook Inc. (NASDAQ:FB) will report its fourth quarter 2012 earnings on Wednesday January 30. According to the analysts, the company will post estimated earnings of 15 cents per share. If the company hits that target, it will be its best quarter of all time. Revenues are expected to come in at around $1.3 billion.

The report, authored by Aaron Kessler and Shyam Patil, puts a price target of $38 on the company’s stock. That’s the same price, when the firm’s stock went public last May, but still well ahead of the company’s current price level. Facebook shares were trading at around $32.30 as the market headed toward close this afternoon.

The big winners in Facebook’s new ad formats according to the checks carried out by the Raymond James analysts, are the news feed advertisements, and the Facebook ad exchange. Demand for the company’s traditional display ads on the right hand side of the screen, “right rail ads”, remained stable in the fourth quarter according to Raymond James, despite research suggesting those ads are not very effective.

Usage trends for Facebook Inc. (NASDAQ:FB) are also turning in the company’s favor, despite the continued well worn trend toward mobile usage. Of the users surveyed by the analysts 21% expect to increase their usage of the social network in the next twelve months, compared to 12% in the last quarter and 15% who expected to decrease their usage of the site.

On mobile, 28% of those questioned expected to increase their usage of the social networking site, compared to 13% who expected to decrease their usage. Surveys are not a good way to numerically enumerate usage patterns, but they do give a good estimate of the direction of sentiment. The direction pointed to by the Raymond James analysis points to positive usage patterns.

Analysts expect Facebook Inc. (NASDAQ:FB) to see migration of television advertising dollars to its site in the coming year, on top of the steady flow from print media, and other web sites. The positives surrounding the company will be tested when it announces its earnings report next Wedneday.

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Paul Shea
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