Facebook co-founder and CEO Mark Zuckerberg smiles at the conclusion of his testimony before the House Energy and Commerce Committee in the Rayburn House Office Building on Capitol Hill April 11, 2018, in Washington, DC.
Wall Street was enamored Thursday morning with Facebook’s first-quarter earnings report, with a handful of brokerages lauding the company’s cash flow, user growth and revenue.
The social network’s shares rose more than 8.5% in premarket trading.
The solid financials came despite heavy investments in safety and security, making the results even more impressive, Morgan Stanley analyst Brian Nowak said. Though profit took a hit thanks to an anticipated fine of at least $3 billion from the Federal Trade Commission over privacy violations, the possible charge didn’t appear to derail long-term theses.
“What a start to 2019,” Nowak wrote in a note to clients. The strong result “speaks to the strength of its engagement, ad offering and ability to drive earnings power … even while aggressively investing to improve its platform.”
Digging into the numbers, Facebook sales, monthly active users and average revenue per user all topped estimates in the quarter. That was enough to draw an upgrade from UBS analyst Eric Sheridan, who changed his rating on Facebook shares to buy from neutral.
“We continue to see FB as a core large cap Internet holding for strong revenue growth at reasonable valuation multiples against 2-3 year growth,” he wrote. “Based on our analysis, medium-term growth opportunities (Instagram, Video & Messenger) are under-appreciated relative to peers.”
Facebook’s profit, revenue and user numbers hit record highs during the quarter. Facebook shares closed at $182.58 on Wednesday.
Here’s a wrap of all the major analyst opinions.