Will Facebook and Zynga Embarrass Analysts?

NEW YORK ( TheStreet) -- If you get uncomfortable when an inordinate number of Wall Street analysts come to a consensus and agree with your sentiment on a stock, you're not alone. You're not being paranoid either.

I'm bullish on Facebook ( FB). I am also bullish Zynga ( ZNGA). Most of Wall Street is as well.

TheStreet's James Rogers ran down the post-IPO quiet period analyst coverage on Wednesday in an article titled "Facebook: Who's Saying What?"

The lowest price target I saw was $34 from Credit Suisse. Most came in somewhere between $38 and $45, with JP Morgan among the most positive.

My review of analysts' comments shows that they agree with me about Facebook's ability to leverage its size and create a wide-ranging ad network to challenge Google ( GOOG), and monetize its growing base of mobile users.

An even more bullish consensus encapsulates analyst sentiment toward Zynga. I won't bore you with details you've likely already seen, but price targets in the teens and reiterated "buy" ratings, particularly in defense of the stock after a selloff, are quite common. The analyst comments coincide with my bullish view on the stock.

On the surface, this might sound like a good thing. The big money agrees. What can be wrong about that? Well, we all know that you cannot necessarily trust what the big money says.

The Netflix ( NFLX) experience from 2011 helps illustrate this point.

Consider what I had to say over at Seeking Alpha this past December about Goldman Sachs analyst Ingrid Chung's coverage of Netflix:
... has anybody heard from Ingrid Chung at Goldman Sachs? ... After Netflix's disastrous Q2 and weak Q3 guidance in July, Chung waxed bullishly, not only reiterating a buy rating and her $330 price target, but raising EPS estimates from 2011 through 2013.
Before you read this next sentence, call some family, friends or co-workers over to your computer screen, because there's nothing like sharing a laugh with others around the holidays. For 2012, Chung predicted Netflix would post EPS of $7.69.

While things seem to be a wee bit more optimistic, Netflix, according to its first quarter-letter to shareholders, expects to come in around break-even and possibly even post a loss. That's going to make $7.69 for the year next to impossible.

To be fair, Chung had plenty of company in being wrong. That said, I am not sure I have ever seen a worse performance than hers.

Luckily, throughout 2011, I was adamantly on the opposite side of the trade. But now, with regard to Facebook and Zynga, I find myself in agreement with the same crew of folks who touted Netflix. That leaves me slightly concerned.

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