The 'Big Beats' Are Back For Facebook, Says Bernstein's Kirjner

• The share price of Facebook Inc FB has appreciated 21.35 percent over the past one year, although it has declined 10.06 percent over the last month.
• Bernstein’s Carlos Kirjner has maintained a Market Perform rating on the company, while raising the price target from $134 to $150.
• The company reported very strong 4Q15 results on January 27, beating the consensus forecasts “by a mile” across almost all metrics.

Analyst Carlos Kirjner mentioned that Facebook reported its 4Q15 results, with in-line users but significantly higher than consensus revenues and margins, despite solid FX headwinds, which in turn led to a meaningful non-GAAP EPS beat.

Reported ad revenues were up 57 percent year on year and 66 percent on an FX neutral basis, accelerating sequentially. Total revenues came in 9.1 percent ahead of consensus, with ad revenues beating the consensus forecasts by 9.5 percent.

“The FX headwind of $322 million and the associated FX-neutral revenue growth mean that the beat was, in fact, probably larger as consensus generally underestimates FX effects,” Kirjner said.

On an FX neutral basis, ad revenues accelerated year on year for the second consecutive quarter, driven by sustained MAU and DAU growth across all regions. On a de-seasonalized, constant currency basis, ARPUs significantly accelerated in North America and ROW, while decelerating in Asia and Europe.

“We believe the ARPU deceleration in these two regions may be attributable in part to geographic mix shift, as lower ARPU European markets are likely growing users much faster than higher ARPU geographies within those regions,” Kirjner explained.

According to the Bernstein report, “Management continues to manage over-optimistic near and mid-term expectations about Oculus/VR and WhatsApp.”