Morningstar's Mogharabi Explains Bearish Facebook (FB) Stock View on CNBC

Morningstar's Ali Mogharabi discussed why he is cautious on Facebook (FB) stock ahead of the company's earnings release on CNBC today.
By Lindsay Rittenhouse ,

NEW YORK (TheStreet) -- Although Facebook  (FB) - Get Report has been "hitting on all cylinders the past few quarters," Morningstar's Ali Mogharabi said he has a bearish view on the stock on CNBC's "Power Lunch" Wednesday.

"I think the market should expect some deceleration in revenue growth in the second half of this year," Mogharabi warned, as management "hinted" at this.

His comments come ahead of Facebook's 2016 second quarter earnings results, scheduled to be released after today's market close.

Analysts are expecting earnings of 81 cents per share on revenue of $6.01 billion.

Mogharabi predicted that Facebook stock is close to the "fair value estimate" Morningstar has on it, which is about $120 a share.

The firm is "being a little more cautious" as revenues may not grow more than in the 40% to 45% range, Mogharabi explained.

Shares of Facebook are higher by 1.42% to $122.94 late this afternoon.

(Facebook is held in Jim Cramer's charitable trust Action Alerts PLUS. See all of his holdings with afree trial.)

Separately, TheStreet Ratings rated Facebook as a "buy" with a score of B+.

The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. TheStreet Ratings feels its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

You can view the full analysis from the report here: FB

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

Loading ...