The investment world has not embraced for Facebook (FB) whole heartedly yet. It seems analysts would like the company when it showed promise and dislike the company when a new revenue idea didn't work. But recently it looks like the company may have put together a nice revenue campaign that will last and analysts are expecting big things for the company going into 2013.
Analysts Are Bullish This Time FOR REAL
BTIG analyst Richard Greenfield upped his rating on Facebook shares to Neutral from Sell, citing expectations that the company will "significantly" beat the Street's Q4 financial expectations.
"We believe the company will significantly exceed Q4 2012 expectations. Given the expectation for a notable acceleration in Q4 2012, carrying over into [the first half of 2013]."
He expects fourth quarter ad revenues up 47% and total revenues up 37%. 2013 revenue expectations have been revised from $5.6 billion to $6 billion. Even though the company has been upgraded, the "buy" rating will not be suggested. The analyst does not believe the valuation of the stock is not yet compelling enough.
BTIG is not ready to buy Facebook yet, but another analyst is. Stifel Nicolaus raised its rating on Facebook from Hold to Buy and established a $26 price target.
"Facebook reported modest upside to our estimates and consensus, with an impressive 14% of total revenues from mobile. The contribution from mobile more than offset a $39mn q/q decline in desktop ad revenues. ... Importantly, total revenue growth accelerated and margins increased. We believe the growth and margin ramp will extend into 2013."
If the future looks brighter for the social media giant right now, it is because it may finally be putting together a good revenue model. The stock tends to go up every time it gets bit closer to a stable ad platform but if it does not work, the stock retreats. It appears that it is putting a nice stable package together and considerable potential in revenue growth looks brighter than ever. It is slowly but surely gaining on Yahoo (YHOO) in display ads but still trails Google (GOOG) by a long shot. But the company is building a good revenue base now and looks like a good bet for a long term investment. 2013 could be a good year for the company.
Investing in Facebook for 2013
I like the direction the stock is taking presently. I think in the beginning of the IPO no one knew really what to expect and things are leveling off as the company starts to develop the revenue stream that everyone was expecting. I am of the opinion that there was a lot of hype on little substance and that "substance" is now taking shape. I would be comfortable investing in Facebook at this point. It still may be a gamble but I believe if the revenue streams are solid we could see the stock continue to move up for the next few quarters.
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Technically Speaking
Facebook is presently about to enter its fourth month of a very extreme bullish peak and valley formation. Its moves from peak to valley show almost 20% gains and losses. The move is very strong too! As I observe the RSI I can see that it has continued to climb steadily with the stock and is a perfect mirror as it moves farther into bullish territory. The MACD has hovered around the '0' marker but looks like it is attempting to push itself higher. As the stock moves between the upper and lower Bollinger Bands, I would like to see the stock use the 50 day MA as support. When I see this happen, I will know the stock is developing a stronger bullish trend.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
