We’re in the thick of earnings season, and Wall Street has turned its attention to many of the usual big hitters for guidance. As you have seen from the results, this earnings season has been very hit or miss, especially for “FANG” stocks. In fact, Netflix, Inc.’s (NASDAQ:NFLX) mixed report may have set the tone for the likes of Apple Inc. (NASDAQ:AAPL) and Facebook Inc (NASDAQ:FB), which will step onto the earnings stage in the first week of May.
That said, many investors may be underestimating the potential for a Facebook stock rally.
Despite its size and popularity, Facebook may be a sleeper bullish pick this earnings season. The company hasn’t stolen the mass media headlines a la rumors on Apple’s iPhone 8 or Netflix’s trip to the Academy Awards.
In fact, with Snap Inc’s (NYSE:SNAP) IPO, Facebook has faced a round of negativity it hasn’t seen since the early days of Twitter Inc. (NYSE:TWTR) — back when the latter was considered a threat in the social media market.
SNAP and Facebook Stock
In its current form, Snap is hardly the threat many in the financial media are making it out to be, and this could be a boon for Facebook stock and for options traders come May 3, when the company enters the earnings confessional.
By the numbers, Facebook earnings are expected to surge 45.4% to $1.12 per share from 77 cents per share in the same quarter last year. Furthermore, revenue is seen rising 45.2% year-over-year to $7.82 billion. That’s some serious growth for a company that many feel has exhausted its options in the social media market.
What’s more, some on Wall Street have their sights set even higher. According to EarningsWhispers.com, the whisper number for FB’s first-quarter results comes in 9 cents higher at $1.21 per share. Given Facebook’s history of topping the Street’s targets, the company could very well top even this lofty estimate.
That said, the brokerage community has made no secret of its love affair with FB stock. According to Thomson/First Call, 42 of the 46 analysts following Facebook stock rate the shares a “buy” or better. The 12-month consensus price target, meanwhile rests at $160.72 and represents a meager premium of only about 14% to Tuesday’s close.
While upgrades or initiations are unlikely given the ubiquity of coverage on FB stock, price target increases are more than in the realm of possibilities. In fact, Credit Suisse just lifted its target to $175 from $170 on Monday, and Facebook’s quarterly report could spur more brokerages to follow suit.