Facebook Ramps Up Revenues

We increase our NT estimates for Facebook as we preview its 3Q15 resultsamp160 Concurrent with this report we have made numerous changes to our productbyproduct revenue forecast including adding projections for Oculus VR increased ramp in Premium Video and Instagram offset by a push out for Audience Network contributionamp160 Our price target increases from 110 to 115 as we roll forward our valuation parameters to 2016Investment Caseamp160 We raise our estimates following checks suggesting a strong ramp in Premium Video Instagram and dynamic product ads DPA budget allocations on top of midsingledigit sequential growth for App Install and Newsfeedamp160 We also layer in 21b in Oculus revenue for 2016 but we assume that Facebook will follow a razorrazorblades model and sell the hardware at a loss to drive adoptionamp160 The greater takeaway is that Oculus Instagram and Premium Video ads are but a few of the factors in a stacked product release slate that we have cited in our report quotTime to Rebuild Your Facebook Modelsamp8212Raising to Outperformquot April 21 2014amp160 We hence maintain our Outperform rating based on our productbyproduct forecast approach which leads us to believe 1 FB will be able to drive revenue growth without a material lift in ad loads 2 Street models are too conservative and underestimate the longterm monetization potential new products 3 optionality and upward bias to estimates as they do not contemplate contributions from multiple other productsValuation Our price target is based on DCF with a 105 weighted average cost of capital and a 3 terminal growth rate which suggests 115 vs prior 110Document Link 20 Pages 1078KBThe opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaVillagecom MyersBizNet Inc management or associated bloggers

Become a Thought Leader.
Share your thought leadership article with industry professionals & have them archived in Thought Leadership

Facebook Ramps Up Revenues

Author

Publish date

Channel

Stephen Ju

"About That with Carl Mayer:" Alaina Donnellon (Episode 10: Political Spending) - By Carl Mayer

More Videos:

Become a Thought Leader. Share your thought leadership article with industry professionals & have them archived in Thought Leadership

Facebook Ramps Up Revenues

Enjoying This Commentary? There's More to Love

Stephen Ju

"About That with Carl Mayer:" Alaina Donnellon (Episode 10: Political Spending) - By Carl Mayer

The payment was successful

Cookies

Become a Thought Leader.
Share your thought leadership article with industry professionals & have them archived in Thought Leadership