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BTIG's Rich Greenfield Downgrades Facebook, Believes Investors Expectations Are 'Simply Too Aggressive'

BTIG's Rich Greenfield Downgrades Facebook, Believes Investors Expectations Are 'Simply Too Aggressive' - Facebook, Inc. NASDAQ:FB

Richard Greenfield of BTIG can no longer support a bullish thesis on Facebook Inc FB, as shares are now trading above his $117 price target.

In a report published Friday, Greenfield downgraded Facebook's stock to Neutral from Buy while removing his prior price target. He noted that while Facebook is one of the only companies that offer investors exposure to the shift of media ad dollars to mobile, the associated risk to reward profile in owning the stock is "no longer compelling."

Greenfield further argued investor expectation is "so much higher" today than it was a year ago.

"Facebook has crushed expectations each of the last two quarters, which has led to a dramatic increase in consensus numbers," the analyst wrote. "Yet, management has been quite clear that not only do comparisons get more difficult as the year progresses on the revenue side, but costs ramp notably through the year."

Naturally, Facebook is communicating a long-term view of its businesses to investors which is actually a contrast to legacy media companies that are "far too focused" on improving near-term earnings. Nevertheless, given the success of Facebook's stock over the past year, the analyst believes any near-to-intermediate term metrics versus expectations "could be painful."

Bottom line, while Facebook's valuation is "not expensive" given its continued growth rate, it will be "more challenging" for the stock's multiple to expand if consensus expectations fall over the coming year.

Shares traded down about 1 percent at $119.40 in the pre-market session.

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DateFirmActionFromTo
Jul 2016BTIG ResearchDowngradesBuyNeutral
Jun 2016
Apr 2016AxiomMaintainsBuy

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