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Facebook's Ad Growth Over The Next Year Should Be Boosted By Asia, Rest Of The World

Facebook Inc (NASDAQ: FB) reported another quarterly beat, exceeded expectations for “virtually every metric,” Wedbush’s Michael Pachter said in a report. He maintained an Outperform rating on the company, while raising the price target from $145 to $162.

Facebook reported revenue of $6,436 million, ahead of the consensus estimate of $6,016 million. The beat was driven by strong growth in mobile advertising across all geographies. Mobile advertising revenue accounted for 84 percent of the total advertising of $6,239 million, reflecting y/y mobile ad growth of over $2.3 billion.

“Management remains laser focused on its mobile offering as a source of long-term growth, innovating and tailoring its various ad platforms to capitalize on mobile usage,” analyst Michael Pachter wrote.

Strong Competitive Advantage

Mentioning that Facebook has over 1.7 billion monthly active users, more than 1.1 billion daily active users, and 3 million advertisers, Pachter commented that the company had “a virtually insurmountable competitive advantage.”

Rapid Growth Ahead

Although Facebook seems to be nearing full penetration in North America and Europe, the company is expected to achieve continued momentum in Asia and rest of the world. The analyst believes Facebook is poised for strong ad growth over the next year, driven by growth in Asia and ROW.

“We think ad load, usage, and ad rates can expand for several years globally, with outperformance in underpenetrated regions,” the Wedbush report stated.

Pachter added that Facebook would likely expand monetization of under-penetrated Instagram, WhatsApp and Messenger assets over the coming years.

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DateFirmActionFromTo
Jul 2016Credit SuisseMaintainsOutperform
Jul 2016Goldman SachsMaintainsBuy
Jul 2016Morgan StanleyMaintainsOverweight

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