Friday, October 19, 2012

Facebook Inc (NASDAQ:FB) Receives downgrade ahead of Q3 results Next Week

Facebook Inc (NASDAQ:FB) shares have lost 50 percent of their market value. Equity brokerages are now reducing the price target for the stock ahead of its third quarter results.

BTIG Media rated the stock at Sell with a price target of 416 a share. Stern Agee's Arvind Bhatia lowered its price target to $26, though maintaining his Buy recommendation on the stock.

Is FB a Buy Before The Earnings? Find Out Here

JMP Securities LLC, has set a price target of $30 per share, citing risks associated with revenue from Zynga Inc. as a major reason. It also lowered the earnings estimate for the company. It expects Facebook’s revenue to be in the range of $1.254 billion, as compared to the initial estimate of ~$1.294 billion.

The social networking giant’s advertising revenues has been revised to $1.067 billion, as compared to $1.091 billion, whereas payments revenue, which largely originates from Zynga are now estimated at $187 million, down from $203 million.

JMP also revised the company’s earnings per share to $0.12 from $0.13.

The analysts said, “our downward revisions are based on both ZNGA’s (MO, $3 PT) pre-announced, lower than expected bookings, as well as ComScore data, which showed that PC-based MAU growth is declining, making it all the more important for FB to accelerate its mobile ad initiatives”.

“Despite the high level of negative sentiment, we believe that, at $18.98 per share, FB’s user-base and potential mobile, search, app exchange, and ad-network revenue opportunities are undervalued,” the analysts added.

Shares of FB are outperforming and turned higher by 0.20% after falling 0.80% earlier in the session.

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