Facebook ETFs In Focus Ahead Of Q1 Earnings

Social media giant Facebook (FB - Free Report) is set to release first-quarter fiscal 2019 results on Apr 24 after market close. The company has gained nearly 21% over the past three months. The strength is expected to continue given that Facebook has a reasonable chance of beating earnings estimates this quarter.

Earnings Whispers

Facebook has a Zacks Rank #3 (Hold) and an Earnings ESP of +2.89%. According to our surprise prediction methodology, the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 when combined with a positive Earnings ESP increases the odds of an earnings beat. A Zacks Rank #4 or 5 (Sell rated) stock is best avoided going into the earnings announcement, especially when the company is seeing negative estimate revisions. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Facebook saw no earnings estimate revision over the past 30 days for the soon-to-be-reported quarter. It is expected to record earnings decline of 2.4% but revenues are expected to increase 25% in the soon-to-be-reported quarter. Facebook’s earnings surprise history is robust with the company delivering positive earnings surprise of 13.48% on average over the past four quarters.

The stock belongs to a bottom-ranked Zacks Industry (bottom 34%) and has a Growth Score of B. According to the analysts polled by Zacks, Facebook has an average target price of $196.32, with nearly 85% of the analysts giving a Strong Buy or a Buy rating ahead of the company’s earnings. This represents about 8% upside from the current price.

What to Watch

Decelerating revenue and a narrowing operating margin will continue to weigh on earnings per share. The social media giant expects revenues to decelerate by mid-single digits, excluding currency fluctuations, in the first quarter and slow down throughout the year due to shifts in its advertising business. The company also expects total expenses to rise 40-50% for the full year.

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