Facebook Share Price: What’s the Outlook Leading into the Q1?

We examine some of the key things traders and investors should be aware of before the company releases its first quarter results this week.

Despite regulatory overhang, analysts remain overwhelmingly bullish on Facebook heading into the company’s Q1 earnings this week.

The social media giant will release its first quarter results after the market close on Wednesday, April 28.

Facebook Share Price Outlook: Analysts Remain Bullish

Heading into the upcoming quarterly, on average, analysts rate Facebook a Buy, with the stock commanding an average target price of $343.30 per share, implying some potential upside from current price levels.

On a more granular level, on average, analysts expect Facebook to report Q1 earnings per share (EPS) of $2.37 and Q1 revenues of $23.66 billion.

That suggests the expectation is for a slighlty weaker quarter, on a quarter-over-quarter basis, for the social media giant. In the fourth quarter of 2020, Facebook reported revenues of approximately $28.07 billion and EPS of $3.88.

Overall, analysts have grown increasingly optimistic in the lead up to the Q1, with a number of firms boosting their price targets in the last week.

Credit Suisse, BMO Capital Markets, Jefferies Financial Group and Cowen all raised their price targets on Facebook in the last week.

Of them, Credit Suisse is the most bullish: raising their rating on the stock from Neutral to Outperform and bumping up their price target to $371 from $330.

Despite bullish overtures from the sell-side, in the short-term, the Facebook share price has been far from a star performer. The stock has risen just 4.20% in the last month and 6.97% in the last six. Facebook finished out Monday’s session at $303 per share, slighlty off its 52-week high of $315 per share.

Key Operational Expectations in Focus

Commenting on FY21 expectations, in the last quarter Facebook’s Chief Financial Officer said:

‘We expect year-over-year growth rates in total revenue to remain stable or modestly accelerate sequentially in the first and second quarters of 2021. In the second half of the year, we will lap periods of increasingly strong growth, which will significantly pressure year-over-year growth rates.’

One key detail that investors will likely be keen to gain more insight on is the impact of iOS 14 on Facebook’s ability to deliver targeted ads.

‘While the timing of the iOS 14 changes remains uncertain, we would expect to see an impact beginning late in the first quarter,’ the company noted in its Q4 release. Any reports on the quantum of that impact will be closely watched by the market.

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