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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.
Facebook FB, +0.31% 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 SPX, +2.03% 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 SNAP, +10.48% 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 TWTR, +7.80% 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 AAPL, -0.93% 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.”
Read more: Facebook beats expectations but warns of ‘cross currents’ in 2021
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).”
