Neither the growing threat of Apple Inc. as its chief competitor nor a raging pandemic could derail the revenue runaway train that is Facebook Inc. And Snap Inc. and Twitter Inc. are benefiting in strong trading Thursday.
on Wednesday breezed past Wall Street estimates with a 33% hike in sales, to $28.07 billion, and earnings of $11.22 billion, or $3.88 per share. As expected, advertising accounted for a vast majority of Facebook’s sales, but “other revenue” such as Oculus VR headsets and Portal video-chatting devices, soared 156% to $885 million.
“[Facebook] 4Q20 results beat across the board, as [advertising] revenue rose +31% y/y, helped by an [advertising] recovery and extended Holiday season; [management] expects 1Q to remain stable or ‘modestly accelerate,’” Cowen analyst John Blackledge said in a note late Wednesday that maintained an outperform rating and raised Facebook’s price target to $350 from $340.
UBS analyst Eric Sheridan seconded that opinion, raising his price target on Facebook to $350 from $330, citing “exiting ’20 with momentum” in a note Thursday.
“Engagement across the family of apps is very impressive,” Jefferies analyst Brent Thill said in a note Wednesday that maintains a buy rating and $330 price target. He highlighted 2.6 billion daily active people across the entire Facebook portfolio vs. 3.3 billion monthly active people suggests 79% use a Facebook service daily.
Facebook shares are up 1% to $274.55 in early-afternoon trading Thursday. Over the past year, they have risen 31%, while the S&P 500 index
has advanced 16%.
The blow-out holiday quarter seems to have not only benefited Facebook but its social-media brethren. Evercore ISI analyst Kevin Rippey expects Snap
to post between 65% and 70% revenue growth when it reports results Feb. 4. A strong fourth quarter, he said, hasten Snap’s path to upwards of $10 billion in revenue by 2025.
Snap shares are up 11% in early-afternoon trading.
Meanwhile, KeyBanc Capital Markets analysts Justin Patterson and Sergio Sugura upgraded Twitter
to overweight from sector weight and set a $65 price target in a note to clients Wednesday. They noted the company’s “growing pains that are nearing an end.”
Twitter shares are up 7.5% in early-afternoon trading.
Still, all is not rosy for Facebook headed into 2021.
“We increasingly see Apple
as one of our biggest competitors,” Facebook Chief Executive Mark Zuckerberg warned in a conference call with analysts following the earnings news. And Chief Financial Officer David Wehner cautioned the company faces “more significant ad-targeting headwinds in 2021. This includes the impact of platform changes, notably [Apple] iOS 14, as well as the evolving regulatory landscape.”
Baird Equity Partners analyst Colin Sebastian picked up the threads of the warnings in a note late Wednesday, in which he assigned an outperform rating and $310 price target.
“Management sounded cautious, as expected, related to tough Y/Y growth comps in 2H21, and the potential negative impact from data privacy/ iOS 14 headwinds,” Sebastian said in a note to clients. “Moreover, flattening user growth in a few key markets means revenue growth will be more dependent on frequency of usage/time spent and/or higher ad prices (increasing ARPU).”