Regardless of internal scandals or external protests, pushback and regulation, Facebook (FB) continues to grow at a torrid pace while routinely achieving profit margins that are among the highest on the stock market. In other words, the social media giant proved it is a money-making machine.
Later this month — April 24th — Facebook will show investors whether or not it has kept up, as it releases earnings for the first quarter. Top analyst Brian White of Monness believes the stock will continue to advance, as he reiterates a Buy rating and $225 price target, which implies nearly 26% upside from current levels.
Ahead of the earnings call, White is optimistic that Facebook will “at least meet” his first-quarter estimates revenue estimates and beat EPS projections. He projects revenue of $14.91 billion (lower than the Street’s $14.97 billion) and EPS of $1.49 (lower than the Street at $1.63). The one negative, he notes, is that his “25% YoY revenue growth projection for 1Q:19 represents a sharp deceleration from the 49% growth delivered in 1Q:18."
White concedes Facebook has had a rough year. But he says, although “the stream of consistently downbeat news flow morphed into a torrential downpour of negatively this year...this tropical cyclone of doom has failed to sink Facebook’s ship.” Instead of giving in to pressure, the company actually flipped the script, including “[outlining] new privacy initiatives, [publishing] a steady flow of constructive news releases, promptly [refuting] incorrect media reports and [continuing] to innovate.”
While being outfront is definitely helpful, White still believes that “Facebook has become such an easy target for politicians that a UK Parliamentary report referred to the company as ‘digital gangsters in the online world.’ The company still faces threat from increased regulation (worldwide), including from the EU which continues to enjoy making an example out of the social network. And as the presidential race heats up in the US, Facebook and the industry will continue being a topic of conversation.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, White has a yearly average return of 25% and a 75% success rate. White has an average return of 6% when recommending FB and is ranked #16 out of 5,182 analysts.
All in all, while Facebook is a favorite among critics, it is also a favorite in the stock market. TipRanks analysis of 41 analysts shows a consensus Strong Buy. 34 of those analysts rate the company a Buy, while six issue Hold and only two recommend Sell. The average price target stands at $194.40, suggesting the stock can rise nearly 9% from current levels. (See FB's price targets and analyst ratings on TipRanks)