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Raymond James Upgrades Facebook Ahead Of Q1 Earnings

Facebook, Inc. (NASDAQ: FB) is scheduled to report fourth-quarter results after Wednesday's market close which should come in ahead of expectations, according to Raymond James.

Benzinga · 01/29/2020 15:02

Facebook, Inc. (NASDAQ: FB) is scheduled to report fourth-quarter results after Wednesday's market close which should come in ahead of expectations, according to Raymond James.

The Analyst

Aaron Kessler upgraded Facebook's stock from Outperform to Strong Buy with a price target lifted from $230 to $270.

The Thesis

Raymond James' first-hand checks with advertising and marketing agencies suggest Facebook will report revenue and EPS upside in its earnings report. Specifically, the marketing agency Merkle hinted to a 15% year-over-year acceleration in Facebook spend. Digital advertising platform Kenshoo indicated total social ad spend grew 24% year-over-year.

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Meanwhile, Kessler said a survey of 465 internet users found Facebook remains the "most widely used" app at 78%, followed by Instagram at 73%. Facebook was also ranked as the most important app among the 13 to 45 age group, followed by Instagram. In addition, Facebook Marketplace was found to be the most popular online local marketplace according to the survey. This bodes well for the company's ability to show it can tap new revenue streams.

Another factor that prompted the analyst to turn even more bullish on Facebook's stock is moderating privacy concerns amid new user controls.

Price Action

Facebook's stock traded higher by 1% at $219.66 at time of publication. Analysts estimate the company to report earnings of $2.53 per share on revenue of $20.88 billion.