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Last Minute Thought: Buy or Sell Facebook (FB) Stock Before Q2’19 Earnings?

support@smarteranalyst.com (Ben Mahaney)

Earnings season is almost in full swing -- and a range of notable names are lined up to report results today. One worth watching is none other than Facebook (FB).

The stake is high for the social media giant, as its stock has been soaring nearly 55% so far this year. Can the company's latest results live up to expectations? RBC's top analyst Mark Mahaney says 'yes.'

Ahead of the print, Mahaney reiterates a Buy rating on FB with price target of $250, which implies over 20% upside from current levels.

As always, we like to give credit where credit is due. According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, Mahaney has a yearly average return of 24.1% and an 68% success rate. Mahaney is ranked #34 out of 5,247 analysts.

Mahaney expects Q2 revenue, operating income, and GAAP EPS of $16.28B, $5.83B, and $1.79, respectively, below consensus estimates of $16.50B, $6.22B, and $1.87 for Q2:19, respectively.

The company anticipates full-year 2019 total expenses to grow 47-55% compared to 2018, up from our prior guidance of 40-50% growth. Mahaney expects the company to reiterate its FY19 outlook for Opex Growth guidance of 37%-45% excluding the FTC accrual, along with its 2019 CAPEX guidance of $17B-$19B, and for revenue growth to decelerate sequentially thru 2019 on a constant currency basis.

"Based on intra-quarter data points, and our model sensitivity work, we view Street June quarter estimates as ballpark reasonable, tho we see no clear evidence to support significant upside variance," Mahaney concluded.

All in all, this 'Strong Buy' stock is no Wall Street secret. After all, in just three months, FB stock has attracted 32 'buy' ratings vs. only 4 'hold' ratings from sell-side analysts. With a return potential of nearly 10%, the stock's consensus price target stands at $223.11. In other words, optimism backs this social media story. (See FB's price targets and analyst ratings on TipRanks)

 

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