The initial market reaction to Facebook 's second-quarter report was negative, but Wall Street analysts were generally impressed with the social media giant's performance. The company reported $3.61 in earnings per share and $29.08 billion in revenue. Analysts surveyed by Refinitiv had penciled in $3.03 per share and $27.89 billion in revenue. However, Facebook's user results were closer to expectations, and the company warned that revenue could take a hit in the quarters ahead. Shares came under pressure in extended trading after the report and were off 2.5% in early trading Thursday. Several Wall Street analysts hiked their price targets on Facebook. Baird's Colin Sebastian reiterated his outperform rating and moved his target to $390 per share from $340. "While investors may focus near term on declining growth rates in Q3/Q4 (tough comps and increasing Apple/IDFA impact), potential usage pressures from competing platforms, and big investments supporting development of the metaverse, we would view pullbacks as buying opportunities ahead of seasonally stronger consumer spending trends and increasing benefits from commerce/transactions likely showing up in Q4," the Baird note said. Morgan Stanley has an overweight rating on the stock and hiked its target to $400 per share from $375. Even with the more bullish outlook, analyst Brian Nowak cautioned that Facebook's performance could be viewed as disappointing relative to competitors. "FB's results speak to the continued momentum on the platform, with strength coming from e-commerce, CPG and recoveries in travel and media. But investing, like allocating ad dollars, is often relative…as FB's growth (in this strong ad backdrop) make [Google parent Alphabet's] outsized dollar beat look even more impressive," the Morgan Stanley note said. Here's what other analysts said about Facebook's earnings: Barclays - Overweight, price target to $430 from $410 "Ad revenue growth of 51% Y/Y ex-fx and up 12% Q/Q was the highest growth FB has seen since 2016. At 23x 2022E EPS, the risk/reward remains favorable, but we recognize that we may be at peak growth and margins here in mid-2021 and it could be a steady downhill grind from here for the ads group." Mizuho - Buy, $450 price target "Advertising revenues grew more than 8 points above consensus due to strong shifts to online advertising. Revenue growth guidance was strong for 2H21 at about 10 points above consensus. However, FY21 expense guidance remained at 34% YoY, but it appears aggressive based on historical track records. At the same time, user growth did slow, but we believe unlocking monetization for new products such as commerce and influencers is more important." Credit Suisse - Outperform, price target to $500 from $480 "Hence on overall greater ad revenue projections our price target rises to $500, and we maintain our Outperform rating on the following thesis points: potential for better than-expected ad revenue growth on product innovation (Facebook Shops, Search in Marketplaces, etc.), Street models are too conservative and underestimate the long-term monetization potential of other billion-user properties like Messenger and WhatsApp, optionality for faster FCF growth on greater efficiency on content screening/security costs." KeyBanc - Overweight, price target to $420 from $414 "Facebook's revenue exceeded our/Street estimates by ~3.5%/4.4%, reflecting a strong ad pricing environment. We are encouraged by engagement with video and Reels, as we believe both can open up more monetizable impressions in the near term and medium term. In our view, this can sustain ~20% annual revenue growth before opportunities like Shops become more material." Piper Sandler - Neutral, price target to $385 from $335 "FB released a 2Q21 print with revenues +5% above Piper Sandler and EBITDA +22% better. Profitability was impressive with 56% EBITDA margins, while FB remains focused on investing in the future. However, 2H21 guide points to a meaningful deceleration in growth, at least partially due to Apple ATT." JPMorgan - Overweight, price target to $450 from $390 "FB results were strong at 56% revenue growth w/both op inc & GAAP EPS 20%+ above our estimates. We view the after-market pullback as a function of rapidly rising expectations over the past week w/SNAP, TWTR, & GOOGL prints pushing FB expectations to 60%+ reported growth." Bank of America - Buy, price target to $425 from $400 "The outlook for 2H was very consistent with prior comments, deceleration on tough comps ahead. A strong quarter with positive 2H est. revisions, but the stock traded down 3% after hours (AH), possibly due to a slight US/Europe daily active user (DAU) miss, or less ad acceleration than peers. ... .We think FB has strong ability to capitalize on shopping this year, with several under-monetized and under-valued FB assets (Messenger, WhatsApp, Watch, Reels, AR/VR) to drive growth post-2021." Atlantic Equities - Overweight, price target to $400 from $370 "Q2 revs / op profit were ahead, but the topline performance was not quite as strong as that delivered so far by peers. Also, developed market user trends were somewhat lacklustre, and while likely primarily Covid-related could raise some concerns around competition." JMP - Market outperform, price target to $425 from $395 "While we were impressed with 2Q21 results and believe the broader ad environment is likely to remain favorable for at least the next several quarters, our main takeaway from results was Facebook's more detailed product roadmap with a focus on creators and video in the near term, commerce in the medium term, and VR and the Metaverse in the longer term." UBS - Buy, price target to $416 from $380 "As such, we come away incrementally more positive given FB sounded more confident that post- COVID online consumer behavior appears to be more of a "new norm" and ad targeting headwinds sound increasingly manageable. ... . Net-net, we continue to see FB's ability to drive strong top line growth supported by their broader social commerce initiative and their opportunity to monetize under-monetized surfaces (Instagram Reels, Explore & Marketplace)." Canaccord - Buy, price target to $420 from $380 "Facebook expects y/y revenue growth rates to decelerate meaningfully sequentially as it begins to lap more difficult comps and as the impact of Apple's iOS 14.5 privacy changes are expected to start to take hold. While these privacy changes continue to add uncertainty to Facebook's outlook, the ongoing shift of ad spend to digital channels and the company's efforts to integrate commerce across its platform should support continued strong growth, which combined with a reasonable valuation supports our favorable view on the stock." Jefferies - Buy, price target to $425 from $400 "Most investors were already bracing for a significant deceleration in 2H rev growth, but [management] commentary suggests a more limited slowdown than we had initially modeled. We have increasing conviction that FB can drive $18+ EPS by FY23, which at a mid 20x multiple supports a $450+ stock over time. Q2 delivered the best combination of revenue growth plus op. margin since Q4'17." Guggenheim - Buy, price target to $450 from $410 "Longer-term we believe Facebook is uniquely positioned to benefit from a continued shift to online commerce and sustainable growth given its scale, dynamic advertising infrastructure, innovation within newer AR/VR products." Truist - Buy, price target to $425 from $400 "We're constructive on FB and raise our PT to $425 from $400 following another beat across virtually all key metrics, with macro improvements and sustained strength in commerce driving growth acceleration in 2Q21 even as the economy is re-opening. ... .Video, commerce and AR/VR are key investment areas, offering FB material growth N/M term, and making it one of the best positioned companies to ride the ongoing secular digitization of the global economy. Loop - Buy, $395 target "We think the bulls will continue to think FB is an inexpensive stock vs. its financial characteristics and bears will continue to believe regulatory or reputational issues will eventually impair the company's future growth prospects." Bernstein - Outperform, price target to $425 from $400 "In isolation, Facebook's ad revenue beat was impressive, a healthy margin beat, and guidance coming in right at our numbers. Internet investors already knew this from peer prints driving up the stock ~7-8% this week." Oppenheimer - Outperform, price target to $405 from $375 "Mgmt. leaning into video broadly, as it now accounts for ~50% of time spent, while impressions on Reels/short-form video should increase given highest engagement across the platform. Commerce remains a key focus as FB continues to build eCom stack, pushing toward payment/check-out integration, driving scale and ease of use for businesses." Evercore ISI - Outperform, price target to $450 from $400 "FB reported Beat & Raise Q2 results with slightly upside less than what was suggested by GOOGL's Q2 print, and hence the 3% after-market expectations correction. Key -- fundamentals were intrinsically strong, with Ad Revenue Growth accelerating modestly beyond comps and material Y/Y Operating Income margin expansion." Cowen - Outperform, price target to $415 from $400 "We view FB as the premier social advertising platform, which is itself becoming a more strategic component of an advertising campaign. ... .FB has established a strong mobile capability, and we expect further monetization levers in 2021, including video advertising and Instagram advertising." Wells Fargo - Overweight, price target to $450 from $415 "Ad revenue growth accelerated across regions, driven primarily by pricing. ... .In contrast with initial expectations entering the year for a consumer demand shift from products to services, mgmt now characterizes elevated e-commerce levels as the "new normal". Needham - Hold, no price target "2Q21 demonstrated FB's strong economic engine, including a resurgence of brand advertisers alongside direct response (DR) advertisers such as lead-gen verticals including app installs and ecommerce and performance advertising."
Mark Zuckerberg, co-founder and chief executive officer of Facebook Inc., speaks during an event at Brigham Young University in Provo, Utah, U.S., on Friday, March 25, 2011. Photographer: George Frey/Bloomberg via Getty Images
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