Analyst: Negative Press, Privacy Scandal Won't Keep Facebook From Having A Solid Quarter

Heading into Facebook, Inc. FB's earnings report, investors shouldn't be concerned with any impact from recent negative press related to privacy issues, according to Wedbush.

The Analyst

Wedbush's Michael Pachter maintains an Outperform rating on Facebook's stock with an unchanged $275 price target.

The Thesis

Facebook is expected to report July 25 and despite a "heightened" level of attention from the media relating to recent privacy scandals, the bullish case for the stock remains unchanged, Pachter said in a note. Average global daily time spent by users to be flat between the end of March and the end of June, the analyst said.

Facebook's earnings should also emphasize its continued strong growth internationally and a ramp of monetization activity in the still under-penetrated platforms of Instagram, WhatsApp, and Messenger. As such, the company's "unmatched scale" in its multiple platforms implies the company will remain a core component of digital advertiser budgets.

The analyst is modeling the following metrics for Facebook's report:

• Revenue of $13.59 billion versus consensus estimate of $13.38 billion.
• EPS of $1.73 versus consensus estimate of $1.72 per share.
• Global sequential monthly active user (MAU) growth to fall from 67 million in the first quarter to 64 million.
• Global sequential daily active user (DAU) growth of 46 million.
• Ad pricing growth should drive results.

Price Action

Facebook's stock traded around $210.38 at time of publication Friday afternoon.

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