Facebook Inc (NASDAQ:FB) continues to garner the praise of analysts for its positioning in the online advertising industry. This week Hilliard Lyons analysts initiated coverage of the social network with a Long-term Buy rating, two-year price target of $92 per share and a suitability rating of three.
Facebook leads digital advertising
In a report dated Nov. 18, 2014, analyst Stephen Turner echoed the remarks of most other analysts in saying that Facebook “has an industry leading advertising position.” He cited the fact that the company has 1.35 billion users and that it has acquired even more users through recent major brand acquisitions.
For example, Facebook acquired 200 million Instagram users and WhatsApp’s 600 million users. Also Messenger has 500 million users, and Facebook recently bought the company behind the Oculus Rift virtual reality headset.
What’s next for Facebook?
Like analysts at other firms, Turner also expects to see continued improvements in monetization. He noted that the acquisition of LiveRail should boost Facebook’s video advertising offerings. Also the Atlas acquisition should improve the social network’s cross-device and offline sales tracking and measurement capabilities.
Additionally, the analyst believes that Facebook’s Audience Network will increase the number of ads served up to users by using demographic data on them and allowing third party apps to host Facebook’s ad inventory.
Turner notes that Facebook has been “highly profitable” since its 2012 initial public offering and thinks that the company will keep that trend up even though it has increased its spending recently. He said Facebook should be able to maintain its “above average profitability” by continuing to make acqisitions and developing more products and brands.
Estimates for Facebook
The analyst is estimating fourth quarter earnings per share of 45 cents and $3.74 billion in revenue, which would be a growth rate of 45% year over year. His numbers are slightly lower than the consensus estimate of 48 cents per share and revenue of $3.78 billion.
He expects to see full year earnings of $1.65 per share for the 2014 fiscal year on $12.4 billion in revenue, which would be a 57% year over year improvement.