Facebook is scheduled to release its next earnings report on Wednesday after closing bell, and the consensus estimates call for revenue of $5.36 billion and earnings of 68 cents per share. Wedbush analysts are looking for a very modest beat on sales at $5.37 billion, although their earnings estimate is in line with the consensus.

Facebook Inc Earnings: ARPU, eCommerce To Drive Sales Beat, Says Wedbush

Facebook to benefit from holiday ads

In a report dated Jan. 24, Wedbush analyst Michael Pachter and his team said they’re expecting a number of factors to boost Facebook’s revenue beyond the consensus estimate. Mobile average revenue per user is one important metric, and they’re expecting a sequential increase of 16%, although they think that could even be conservative because of other factors

For example, they noted that the Yahoo Developer Network indicates that the number of minutes U.S. users spent in social and messaging apps climbed by about 50% year over year during the first quarter of last year. They believe this trend carried over through the end of the year. Further, the fourth quarter was the first full quarter in which the Facebook Audience Network was offering video ads, carousel ads, dynamic product ads and click-to-play video ads, which should boost revenue further by pushing cost per thousand impressions higher.

The fourth quarter is also the year’s strongest holiday shopping season, and the social network likely enjoyed a sales boost as a result of the strong e-commerce trends. Facebook ads are among the “most convenient and popular portals for buying,” they believe, adding that Instagram started offering ads to more markets and in more countries toward the end of the third quarter.

Facebook’s trends to remain strong

Pachter and team noted that Facebook’s mobile ad revenue increased by more than $400 million quarter over quarter in the third quarter, surpassing $3.3 billion. They believe the social network’s mobile ad business will grow by about 50% this year to reach nearly $19 billion.

They also noted strong user and monetization trends, which they expect to continue for some time. During the third quarter, the number of monthly active users reached 1.545 billion users, putting Facebook well above competitors. They expect the strong growth to spill over into the company’s other products like WhatsApp and Instagram in the future years. The Wedbush has a $115 price target and Outperform rating on Facebook shares.

Other forecasts for Facebook’s earnings report

Drilling deeper into Facebook’s metrics, Needham analyst Laura Martin and her team said they’re expecting ad revenue of about $5.068 billion, representing a 41% year over year increase. They believe mobile ad revenue made up about 78% of total ad revenue during the fourth quarter, which is similar to where it was in the third quarter. This suggests about $4.1 billion in mobile revenue. They’re looking for about $206 million in Payments and Other Fees revenue, which is a 20% year over year decline.

They remain Buy-rated with a $115 per share price target on Facebook shares. The stock hovered around its opening price today and is at $97.41 as of this writing.

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