Facebook, Inc. (NASDAQ:FB) Analysts Are Pretty Bullish On The Stock After Recent Results

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="It's been a good week for Facebook, Inc. (NASDAQ:FB) shareholders, because the company has just released its latest first-quarter results, and the shares gained 6.4% to US$202. It was a workmanlike result, with revenues of US$18b coming in 3.0% ahead of expectations, and statutory earnings per share of US$1.71, in line with analyst appraisals. This is an important time for investors, as they can track a company’s performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.” data-reactid=”19″>It’s been a good week for Facebook, Inc. (NASDAQ:FB) shareholders, because the company has just released its latest first-quarter results, and the shares gained 6.4% to US$202. It was a workmanlike result, with revenues of US$18b coming in 3.0% ahead of expectations, and statutory earnings per share of US$1.71, in line with analyst appraisals. This is an important time for investors, as they can track a company’s performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content=" View our latest analysis for Facebook ” data-reactid=”20″>View our latest analysis for Facebook

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Taking into account the latest results, the current consensus from Facebook’s 44 analysts is for revenues of US$77.3b in 2020, which would reflect a satisfactory 5.3% increase on its sales over the past 12 months. Statutory per share are forecast to be US$7.26, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$77.0b and earnings per share (EPS) of US$7.45 in 2020. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

Despite cutting their earnings forecasts,the analysts have lifted their price target 9.7% to US$237, suggesting that these impacts are not expected to weigh on the stock’s value in the long term. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Facebook, with the most bullish analyst valuing it at US$300 and the most bearish at US$120 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Facebook’s revenue growth is expected to slow, with forecast 5.3% increase next year well below the historical 32%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 16% per year. Factoring in the forecast slowdown in growth, it seems obvious that Facebook is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Facebook. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that Facebook’s revenues are expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Facebook going out to 2024, and you can see them free on our platform here.” data-reactid=”38″>Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Facebook going out to 2024, and you can see them free on our platform here.