Facebook's Earnings Continues To Impress Analysts, Stifel Sees Upside To $200 Per Share

Yet again, Facebook Inc FB impressed investors with its earnings report, which was highlighted by "impressive" momentum in its advertising business, Stifel's Scott Devitt commented in a research report. The analyst maintains a Buy rating on Facebook's stock with a price target boosted from $170 to $200 (see Devitt's track record here).

For the first time in more than four years, Facebook's ad revenue growth was below 50 percent on a year-over-year basis, but at 49 percent (excluding foreign exchange), it was more than sufficient as the company approaches the $40 billion annual run-rate, the analyst stated. Growth in the quarter was driven by 23 percent pricing growth, but a 19 percent impression growth does mark the slowest inventory growth since 2015.

Looking forward impressions are expected to continue slowing down by a few hundred basis points per quarter, Devitt added. As such, Facebook will also see slower revenue growth but could be countered by incremental monetization from Messenger which is expected to "move a little faster."

As a whole, Facebook's ramping contributions from video and Instagram should nevertheless keep the company's growth at "healthy levels" through at least the end of the year. But over the next year, management will need to "fend off challenging year-over-year comps" from ramping monetization on Messenger and the potential for revenue initiatives from WhatsApp.

Finally, over the longer-term initiatives in artificial intelligence and augmented reality also "carry significant optionality."

At time of publication, shares of Facebook were up 5.18 percent at $174.19.

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