Facebook sales offset spending concerns: analysts
Facebook Inc is picking security of its platform over near-term profits but Wall Street analysts remain largely unfazed.
At least 13 brokerages raised their price target on shares in the world`s largest social network following Wednesday`s quarterly results, with RBC Capital Markets making the most bullish move and raising its target by $35 to $230. The median price target was $208.
Shares of the company were down a little less than 1 percent in premarket trading on Thursday but are still up nearly 60 percent this year after hitting a record high in regular trading on Wednesday.
Facebook faced harsh criticism in Washington over its failure to prevent Russian operatives from using its platform for election meddling, but the earnings report showed just how insulated its business remains from political risk.
"Yes, we take foreign meddling in U.S. elections very seriously. Call it what it is – political warfare. And countering will – and should – raise the cost of doing business for FB," RBC Capital analyst Mark Mahaney said.
"But that business is inherently extremely impressive."
The company reported a 79 percent surge in quarterly profit on Wednesday and revenues were up nearly 50 percent, overwhelmingly driven by mobile advertising.
Chief Executive Mark Zuckerberg condemned Russia`s attempts to influence last year`s election through Facebook posts and advertisements and said he would boost spending on security and hire 10,000 additional staff to review content on the network.
Based on past practice many of those people will be contractors but the company said the spending would hit profits, with expenses overall expected to grow by between 45 and 60 percent next year.
Barclays analyst Ross Sandler said the company "should have plenty of runway for years to come – and remains a core holding for any internet investor."
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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