Can Strong Earnings Send Facebook (FB) Stock Even Higher?

What's Happening With FB View more about FB >

Social media leader Facebook (FB) reports second-quarter numbers July 24. The company reports after the market close with the consensus calling for earnings of $1.90 per share on sales of $16.45 billion. During the same period last year Facebook earned $1.74 on revenue of $13.32 billion and the stock is up 53% on the year.

Technical Analysis

FB was recently trading at $200.98 down $17.64 from its 12-month high and $77.96 above its 12-month low. InvestorsObserver’s Stock Score Report gives FB a 62 long-term technical score and a 62 short-term technical score. The stock has recent support above $190 and recent resistance below $205. Of the 35 analysts who cover the stock 27 rate it Strong Buy, 4 rate it Buy, 4 rate it Hold, 0 rate it Sell, and 0 rate it Strong Sell, FB gets a score of 68 from InvestorsObserver’s Stock Score Report.

Analysts' Thoughts

Facebook has been dealing with data privacy concerns over the last several years, but the company continues to grow, and being the only company that can truly compete against Google (GOOGL) in the online search market the stock remains a favorite on Wall Street. Concerns that the data scandal would scare away advertisers has faded as Facebook has grown earnings by 47% annually the last five years and is expected to grow profits an additional 20% per annum over the next five years. With Facebook’s huge user base the company is and will remain a force in online advertising, and with powerful platforms like Instagram and WhatsApp starting to build their revenue streams there is a lot of strength in the company moving forward, particularly if it can stay out of the news for privacy concerns. The street expects a nice earnings beat with a whisper number of $2.01 for the quarter, and analysts have an average price target of $212.59 on the stock.

About Facebook Inc.

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.

Already a member?

Login to see your Stocks to Watch Trade Ideas.

Not yet a member?

Receive a Morning Action trade idea every market day in the Morning Update, plus Stocks to Watch Trade Ideas every Saturday.

Become A Member