Facebook (NASDAQ: FB) has been struggling with a number of issues over the past years. The problem of how the company manages its user’s data has always been an issue, but recently it has grown in intensity to a feverish pitch with the call to break apart these tech giants under anti-trust laws gaining newfound popularity.
Facebook has been one of the main targets of these criticisms, having recently been expelled from the S&P ethics index in what’s been a pretty hard blow to their reputation. However, one analyst is saying that from a pure valuation perspective, Facebook’s stock is now an attractive buy.
Barclay’s analyst Ross Sandler went on to say on Tuesday that he thought Facebook is too cheap to ignore at current valuations, despite the fact that the company’s stock has been surging dramatically over the course of the year.
“We expect FB will report revenue and EPS [earnings per share] above our estimate and consensus and would add to positions into the print,” he wrote. Facebook is “too cheap to keep ignoring,” added Sandler, reiterating his “overweight” rating for the company’s stock and predicting that Facebook will report Q2 earnings well above what the market expects. “We think FB shares can continue to move higher,” he added.
Earlier in June, many mainstream outlets reported that the Federal Trade Commission (FTC) had the jurisdiction to begin antitrust probes in the major tech company if they should choose. When coupled together with comments from President Trump alluding that such an investigation could be possible in the future, many consider now to be an uncertain time for the major social media giants.
However, Facebook’s stock hasn’t seemed to take this into account, or at least its investors aren’t too worried about this possibility, as shares of Facebook have surged almost 50 percent since the start of the year.
Sandler doubled down on his buy rating for the stock, reaffirming his $240 price target for the company. Facebook was up 1.8 percent in response to the news, ending the day at $199.21 per share as opposed to the $144 price seen since the beginning of 2019. Time will tell whether Facebook will survive the coming antitrust threat, but it appears that at least in the short term prices are poised for a continued rise.
Facebook Company Profile
Facebook is the world’s largest online social network, with more than 2 billion monthly active users. Users engage with each other in different ways, exchanging messages and sharing news events, photos, and videos.
On the video side, the firm is in the process of building a library of premium content and monetizing it via ads or subscription revenue. Facebook refers to this as Facebook Watch. The firm’s ecosystem consists mainly of the Facebook app, Instagram, Messenger, WhatsApp, and many features surrounding these products. Users can access Facebook on mobile devices and desktop.
Advertising revenue represents more than 90% of the firm’s total revenue, with 50% coming from the U.S. and Canada, and 25% from Europe. With gross margins above 80%, Facebook operates at a 40%-plus margin. – Warrior Trading News