Thursday, September 13, 2012

Facebook Inc (NASDAQ:FB): Zuckerberg’s Comments Invite Mixed reactions from analysts

Facebook Inc (NASDAQ:FB) founder and CEO Mark Zuckerberg's comments on his company in his first public appearance since May invited mixed reactions from the analyst community.

Among the more positive reaction is that from RW Baird’s Colin Sebastian who said he was convinced that “Long-term opportunities should ultimately trump near-term revenue and expense headwinds.”

He said he was encouraged by Zuckerberg’s remarks about Facebook's mobile prospects, which suggest to him that monetization of mobile can improve.

Jefferies & Co.’s Brian Pitz, who has a Buy rating on the stock and a $30 price target, writes that the most interesting thing he heard was when Zuckerberg said the company already has a team set up working on search.

"The biggest takeaway from today’s event was Zuckerberg’s confirmation that Facebook would eventually enter the search business."

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Topeka Capita Markets’ Victor Anthony, who has a Buy rating on the stock and a $36 price target, was overall more reassured about Zuckerberg as a chief executive.

Ken Sena with Evercore Partners, who has an Equal Weight rating on the stock, cut his price target to $23 from $34 after cutting his estimates. While he still believes in Facebook’s opportunity on mobile devices, he thinks the company is seeing a decline in “engagement” by users that’s not fully made up for by mobile.

Needham & Co.’s Laura Martin this morning reiterates a Buy rating, but cut her price target to $25 from $40, writing that while she still likes the “long-term optionality” of Facebook, she has concerns about mobile and about the company’s ability to monetize its international growth.

Regarding Zuckerberg’s comment that the company should have been quicker to develop “native” applications for Apple’s iPad and iPhone, and for mobile devices running Google’s Android software, Martin is concerned this has prolonged the revenue opportunity from mobile.

"We project FB’s mobile revenue at approximately $150mm in 2012, out of $4.9B total. We expect the US (20 percent of FB users) to represent 80 percent of near-term economics.

Shares of FB jumped 7.73% to $20.93 on Wednesday and closed at $20.93.

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