Facebook Stock Affirmed Outperform at JMP on More Activity and Wider Ad Base

Facebook, which reports earnings Wednesday, was affirmed outperform with a $215 target price by JMP analyst Ronald Josey.
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JMP Securities analyst Ronald Josey reiterated his outperform rating on Facebook  (FB) - Get Report, prior to the social-media company’s first-quarter earnings report set for Wednesday.

He affirmed his share-price target at $215.

Facebook should benefit from the same factors Snap  (SNAP) - Get Report did in the quarter, including greater customer engagement and a growing and diversified ad base, Josey wrote, according to the Fly.

Photography platform Snap said last week that revenue jumped 44% in the first quarter from a year earlier, operating cash flow more than doubled and daily active users increased 20%.

As for Facebook, its unveiling last Friday of its new free group video chat shows that its platform is primed to generate sustained engagement growth as its digital living room strategy rolls out, Josey said.

Also last week, Facebook said it invested $5.7 billion in Reliance Jio, the digital technology arm of Reliance Industries, India’ largest private-sector company.

That investment highlights Facebook’s long-term approach and could lead to further investment in India and elsewhere in the world, Josey said.

Morningstar analyst Ali Mogharabi puts his fair value estimate at the same $215.

“While we expect covid-19 to lower Facebook revenue in 2020, we also foresee the pandemic strengthening the firm’s network effect,” he wrote in a report last month.

“We expect a return to double-digit revenue growth in 2021, as higher interaction and usage after the pandemic will attract rebounding ad dollars.”

Facebook shares recently traded at $188.10, down 1%. The stock has lost 14% over the past three months, about the same as the S&P 500.