Shares in social media giant Facebook (FB– Research Report) surged by 11.5% in after-hours trading on January 30. FB has just reported results above Street largely across the board. Q4 Revenue & GAAP Op Income came in well above Street. FB reiterated its FY19 opex growth guide, and disclosed that its platform has reached 2.7 billion monthly average users, with Instagram passing 500MM daily actives on Stories.
Most notably, revenue grew 33% Y/Y to a whopping $16.91B, however Ad Revenue growth dropped (very modestly) from 35% in Q3 to 33%. Meanwhile Q1 Revenue Outlook calls for mid- single digit Q/Q deceleration, while its FY19 OpEx growth guidance of 40-50% & $18-$20B capex makes FY19 an aggressive investment year.
Following the report, five-star RBC Capital analyst Mark Mahaney (Track Record & Ratings) ramped up his FB price target from $190 to $200 (26% upside potential).
“Reiterate Outperform on our top internet long” Mahaney told investors in a January 30 investor report. “We feel we could be in a period of sustained re- rating as the worst FB fears appear not to have been realized” he explained.
Current Revenue growth deceleration is modest (35% Y/Y growth in Q3 to 33% in Q4), said the analyst, while daily average users increasing in the US for the first time in 3 quarters is a positive sign. Indeed, Facebook revealed it added 1 million daily members in the US and Canada.
“We’ll simply highlight here what we believe is an intrinsically very attractive valuation (19x ’20E GAAP P/E), very strong fundamentals ($15B in FCF even in deep investment mode), and a compelling value proposition to both consumers (2.7B and counting…) & advertisers (Google-like ROI)” cheered Mahaney.
As TipRanks reveals, this rating is on the bullish end of the FB spectrum. Overall, the stock scores a Moderate Buy consensus with a $179 average price target. This is based on ratings from only best-performing analysts:
Analysts like Facebook, but they love Alibaba
Another stock that has just come out with earnings is Chinese e-commerce king Alibaba (BABA– Research Report). As we can see Alibaba boasts a unanimous ‘Strong Buy’ consensus from the Street. That’s with an average price target touching $200.
December Q BABA numbers came in mixed relative to the Street, with revenue a tad below on most segments (though slightly above in China Commerce) while profit came in above.
“Though Macros remain a big unknown, we view BABA’s Fundamental Risk/Reward as very compelling here” writes Mark Mahaney. He boosted his price target from $200 to $210 post results.
Enjoy Research Reports on the Stocks in this Article:
Alibaba Group (BABA) Research Report
Facebook, Inc. (FB) Research Report
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