With the stock down 8% from its 52-week high, Oppenheimer sees multiple reasons to be positive
Published By: Ken Bock on January 10, 2017 07:30 am EST
Oppenheimer issued its top picks for 2017, and named Facebook Inc (NASDAQ:FB) in the top picks Internet stocks. The firm maintained an Outperform rating and $144 price target on FB stock implying 15.29% potential upside over Monday's closing price of $124.90. Analyst Jason Helfstein of Oppenheimer sees multiple reasons to remain positive on FB stock with the stock price down eight percent from its one-year high.
Three reasons highlighted by the analyst include, “1) shopping ads gained significant traction during the holidays; 2) FB usage surged ahead of US presidential election; and 3) Instagram momentum is accelerating, driven by product innovation.” Meanwhile, Mr. Helfstein believes FB shares are trading at an attractive valuation at 14x/11x 2017E/2018E EBITDA versus 30 percent expected growth over the next couple of years. The firm also raised 4QFY16 and fiscal 2017 revenue estimates by 2%/3% to reflect DPAs & Instagram strength, while EBITDA estimates remain largely unchanged for Q4FY16 and FY2017.
However, the firm maintains conservative estimates for marketing & R&D spending. Facebook stock closed up 1.21% at $124.90 in Monday trading session following positive read from Oppenheimer. The social networking giant is scheduled to announce its FY16 fourth quarter results on Wednesday, February 01.
In November, FB’s stock price witnessed a slight sell-off when the management guided for aggressive spending in CY17. Now the market may be looking for the company to deliver news fine enough for FB shares to rebound. For the fourth quarter, shareholders will possibly be paying particularl attention to the company's EPS, revenue, and user growth in addition with any management commentary regarding its 2017 expectations.
On average, the consensus expects FB to report $8.46 billion revenue and $1.30 non-GAAP EPS, up 45% & 65% from a year-ago quarter results, respectively. FB's Messenger and WhatsApp each have more than one billion monthly active users. Instagram had 500 million MAUs when the company reported Q3 results but now the figure has reached 600 million since then.