Mixed sell side reaction to Facebook results; stock gains 3.5%
- Not spooked by ad trends, BMO downgrades Facebook (FB) from Buy to Hold anyway due to the lack of visibility surrounding the opportunity in Social TV advertising. For the stock to move higher, the Social TV story is needed ... the rest is priced in.
- Deutsche: "We think the ad-load issue is going to weigh on the multiple but don’t see it as net risk to estimates ... would add to positions on pullbacks."
- Noting decelerating user growth, steady newsfeed ad load, and several data points suggesting engagement in developed markets isn't growing that much, Bernstein suggests revenue growth must increasingly come from rising price-per-ad. "We don’t think there is enough visibility into the demand for Facebook ads to make a high conviction call on the stock."
- Calling the big selling amid the CC an "over-reaction," Pivotal Research ups to a Buy with price target lifted to $57 from $48. "So long as [teens] can be reached on Facebook to a degree and so long as FB has a unique capability to reach more total people than any other media owner, Facebook retains advantage in its ad sales efforts against most advertisers."
- Evercore's Ken Sena boosts his estimates and hikes the price target $5 to $65. Even assuming the absence of ad load growth beyond 2014 (which he's not sure will happen), says Sena, his Street-high estimates can still be met thanks to the remaining three ad growth drivers: users, engagement, and pricing.
- Shares +3.5% premarket.
- Last night's earnings coverage.
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