Facebook Inc (FB) Price Target Raised Post-Earnings


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Facebook Inc (NASDAQ:FB) released its latest earnings report last night after closing bell, exceeding the estimates of analysts with strong key metrics. As a result, Sterne Agee analysts have increased their estimates and price target for the social network.

Facebook beats estimates

The company reported a 153% increase in mobile ad revenue year over year and a 24% increase quarter over quarter. Mobile made up 62% of Facebook Inc (NASDAQ:FB)’s ad revenue mix. Facebook saw strong results across multiple regions. Higher usage, engagement and monetization, as well as solid operating expenditures control, drive those solid results.

In a report dated July 24, 2014, analysts Arvind Bhatia and Brett Strauser said the highlight of last night’s earnings report was Facebook’s mobile advertising, which was $1.66 billion for the second quarter. Wall Street was estimating $1.58 billion. The social network also saw growth in desktop ad revenue, which increased by 8% year over year, beating their estimate of 1% growth in desktop.

Overall revenue rose 61% year over year, while EBITDA increased 92%. Total revenue was $2.91 billion, passing consensus estimates by nearly 4%. Ad impressions fell 25% because of the shift to mobile, which shows fewer ads. On the plus side, though, Facebook saw its price per ad increase 123% year over year as it shifted to News Feed ads on both desktop and mobile. The analysts note that the increase in price per ad is a key function in Facebook Inc (NASDAQ:FB)’s goal of improving advertisers’ return on investment.

Facebook estimates increased

Because of last night’s solid results, the Sterne Agee team increased their 2014 revenue, adjusted EBITDA and earnings per share estimates. Their revenue estimate goes to $11.99 billion for the full year, while their adjusted EBITDA estimate rises to $7.7 billion. They’re now estimating earnings of $1.64 per share for the full year. Their previous estimates were revenue of $11.55 billion, adjusted EBITDA of $7.1 billion and earnings per share of $1.48.

They also increased their estimates for 2015, raising their revenue estimate from $15.61 billion to $16.25 billion. Their adjusted EBITDA estimate moves from $9.35 billion to $10.13 billion, and their earnings per share estimate goes from $1.84 to $2.04 per share for 2015.

The Sterne Agee team reiterated their Buy rating and increased their price target for Facebook Inc (NASDAQ:FB) from $80 to $85 per share.