Facebook (FB) Stock Up as Analysts Weigh In

NEW YORK (TheStreet) -- Shares of Facebook (FB) were gaining 3.8% to $81.43 Thursday following notes from analysts discussing the social network's traffic and mobile ad growth.

In a note to investors, JPMorgan analyst Dough Anmuth cited comScore data indicating that Facebook core services accounted for 24% of all U.S. smartphone activity in April, up from 22% in March. All other social networks including Snapchat, Twitter (TWTR), and Facebook-owned Instagram and WhatsApp combined to account for 5% of smartphone activity in April.

Facebook's core services on desktop and mobile accounted for 19% of all U.S. Internet time in April, according to comScore's data.

"Facebook remains our top pick in 2015 as we believe it's still early in monetizing Facebook's base of 1.4B users and the company is building other strong franchises in Instagram, Messenger, & WhatsApp," Anmuth wrote.

JPMorgan reiterated its "overweight" rating and $100 price target for the social network.

Morgan Stanley analysts also commented on Facebook's performance, highlighting that the company drove one third of all U.S. digital as growth for the fifth straight quarter, according to Business Insider. Facebook is seeing accelerated growth while mobile ad growth is slowing, according to Morgan Stanley analysts.

"Facebook - with its still-low pricing, industry leading reach and cross-platform targeting - is the main beneficiary and driver of the continued movement of ad dollars onto mobile," Morgan Stanley analysts wrote.

Insight from TheStreet's Research Team:

Facebook is a core holding of Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. During the most recent weekly roundup, this is what Jim Cramer, Portfolio Manager and Jack Mohr, Director of Research - Action Alerts PLUS had to say about the stock: 

Facebook (FB:Nasdaq; 1,300 shares; 3.92%; Sector: Technology): The shares continued their downtrend, despite recent quarterly results that we viewed as positive. The company beat on the bottom line and missed slightly on the top line, with the miss driven exclusively by currency headwinds.

Meanwhile, on each key engagement metric (daily active users, monthly active users, mobile DAUs, mobile MAUs) the company simply crushed expectations. The quarterly results, in and of themselves, are incredibly strong. In fact, we have no qualms with any of the line items, and we believe 55% constant currency growth in advertising revenue is one of the most remarkable feats for a tech company that has been around for over a decade. That being said, this isn't a company that you evaluate for its quarter-to- quarter vicissitudes. Like Apple, this is a stock you own, not trade.

Beyond the impressive headline results, however, is a more powerful message that CEO Mark Zuckerberg conveyed on the call: the magnitude of the company's, size, reach and level of engagement. This is what the market truly overlooked. Our target is $90.

-Jim Cramer and Jack Mohr, "Weekly Roundup," originally published 5/8/15 on ActionAlertsPLUS.com

Separately, TheStreet Ratings team rates FACEBOOK INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate FACEBOOK INC (FB) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. 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 and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and premium valuation."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 5.9%. Since the same quarter one year prior, revenues rose by 41.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • FB's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 7.97, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has increased to $1,700.00 million or 32.29% when compared to the same quarter last year. Despite an increase in cash flow, FACEBOOK INC's average is still marginally south of the industry average growth rate of 41.59%.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Internet Software & Services industry and the overall market, FACEBOOK INC's return on equity is below that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: FB Ratings Report

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