Facebook Results Might Not Be Exceptional
Analysts believe that Facebook results will not supersede expectations.
Facebook Inc. is all set to post its results for the first quarter of the fiscal year of 2016, on Wednesday, 27th April. The results will surface after the closing bell. Considering the past nine trimester where one was an exception, the revenues of the company have succeeded in beating the expectations of analysts with a high margin. So now, the investors have become immune to Facebook surpassing their expectation with significant growth numbers all the time.
On the other hand, Alphabet Inc. surfaced its results last week that did not meet with the estimates put forward by the analysts at The Streets. The stocks of the company were poles apart from the estimates which has made the investors concerned about the Facebook stocks. There is a correlation between the revenue of Google and Facebook which has intrigued the analysts and investors.
FB is likely to make a profit worth 62 cents for each share where its revenues will suffice to $5.25 billion.
The analyst at Citigroup, Mr. Mark May mentioned in an updated research note that was sent to investors and clients that since the time Google has posted its results, the expectation level for Facebook results has besieged. As per Mr. May, considering the relation of results between Facebook and Google, it is speculated that former will post the results for the first quarter relatively higher than the estimates consensus. Mr. May has granted the company’s stock a Buy rating with a price target of $133.
MKM Partners, an investment firm also came up with an updated research note that surfaced to investors and clients today, also talked on the same topic. Mr. Rob Sanderson an analyst at MKM noted that the budget allocation is now focused more on digital during the present quarter that ended on March 31 was comparatively weak. A similar trend was also observed when it came to Google. As per the analyst, the general sentiment is that the television advertisers are likely to have a sound quarter with Google results that strengthens the notion. He further mentioned that the expectations for Facebook are suggest ‘a good but not a great quarter’ in terms of advertisement growth.
Mr. Sanderson also highlighted that various digital advertisement agencies are posing continuous strength for FB during the quarter, but the tech giant is factoring in bigger deceleration than it was expected initially. Other than that, he also reported that publishers on Facebook have reported a decline in terms of traffic.
As per Mr. Sanderson, this is merely due to the popularity and increase in usage of Instant Articles. Along with other factors, the analyst pointed out that according to Com Score, a drop on a year over year basis has been observed in terms of the time spent by users on Facebook sites this quarter. However, this was because of the changes in iOS applications that tweaked the measurements. MKM has granted a Buy rating on Facebook stocks with a price target of $135.
