Facebook, Inc. (NASDAQ:FB) defied analyst predictions to release its yearly results, which were ahead of market expectations. The company beat expectations with revenues of US$86b arriving 2.0% ahead of forecasts. Statutory earnings per share (EPS) were US$10.09, 7.6% ahead of estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for Facebook from 45 analysts is for revenues of US$104.3b in 2021 which, if met, would be a huge 21% increase on its sales over the past 12 months. Per-share earnings are expected to swell 18% to US$10.49. In the lead-up to this report, the analysts had been modelling revenues of US$104.0b and earnings per share (EPS) of US$10.40 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$333. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Facebook analyst has a price target of US$375 per share, while the most pessimistic values it at US$195. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Facebook's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Facebook's revenue growth will slow down substantially, with revenues next year expected to grow 21%, compared to a historical growth rate of 28% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 15% next year. Even after the forecast slowdown in growth, it seems obvious that Facebook is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Facebook. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Facebook going out to 2025, and you can see them free on our platform here..
We also provide an overview of the Facebook Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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