Facebook Inc stock took a tumble on Monday but is trying to recover today as the social network’s annual F8 conference gets underway. As expected, the company unveiled a new chatbot platform for its Messenger app, and more goodies are on the way. Facebook Inc (NASDAQ:FB) stock climbed by as much as 1.6% to $110.73 per share in afternoon trades today.
FB price target increased
Pivotal Research analyst Brian Wieser upped his price target for Facebook Inc (NASDAQ:FB) stock from $136 to $154 per share this week. He also raised his price target for Google parent Alphabet, noting that the two companies are going head to head in digital advertising but adding that Facebook stands in stark contrast to Google because of its focus on its core business and “future evolution.”
Wieser sees several areas which should drive growth at Facebook, with digital ad growth continuing to be one of the main drivers. Wall Street is projecting a 52% year over year increase in ad revenue for the first quarter.
Facebook to report earnings Apr. 27
Facebook is scheduled to release its first quarter earnings report after closing bell on April 27, and analysts are already putting out their preview reports. William Blair analyst Ralph Schackart and team expect the social network’s ad revenue to be at least in line with expectations at $5.04 billion, adding that their outlook for ad spend on Facebook for this year is still robust, based on their industry conversations.
They don’t think the social network will report the strong revenue upside it did in the fourth quarter when it beat expectations by 9.3% because the first quarter is usually seasonally slower. Also estimates for this month’s report have moved higher following the last quarter’s report. They do say, however, that a third-party Facebook Inc (NASDAQ:FB) buyer indicated strength in e-commerce on Facebook during the first quarter, which they see as a big positive because usually e-commerce slows down after the holiday shopping quarter.
The William Blair team continues to rate the company’s stock at Outperform.
Facebook trends remain strong
Susquehanna analyst Shyam Patil conducted some checks of social advertising to gauge how well the company did during the first quarter and found strong core trends, excluding Instagram. He said same client spend has been trending upward from 20% to 35% year over year and that most of his checks were better than expected.
He added that Instagram has become large enough to impact Facebook’s numbers and that its results seem to be largely incremental. He said Instagram spending has climbed from less than 5% of budgets in the third quarter to between 5% and 10% in the fourth quarter and 10% to 15% in the first quarter. By the end of this year, he expects it to hit 20% to 25% of budgets.
He sees Messenger as a “wild card” for the second half of this year as Wall Street eyes the potential for monetization. It’s unclear yet what route the social network will take to monetize the app, but Patil suggests that because the line between email and text messages is blurring, consumers may be more willing to accept ads inside their text messages. Other possibilities include e-commerce and payments, although the Susquehanna analyst said his checks indicate that customer service might be the best option. Facebook Inc (NASDAQ:FB) has already taken steps in this direction with several major companies adopting Messenger as an option to receive customer service. There have also been reports that the social network will soon enable functions like ticket sales through the platform, keeping a fee from those sales to monetize it.