Tags: facebook | rating | share price | stock | sell

Pivotal Research Says 'Sell' Facebook Now

Pivotal Research Says 'Sell' Facebook Now
GilbertC/Dreamstime

By    |   Monday, 31 July 2017 03:30 PM

An analyst at a small research firm reportedly is doubling down on his negative call for Facebook Inc. shares, predicting nearly a 20 percent drop.

Pivotal Research lowers its rating for Facebook to “sell” from “hold,” despite the fact that Facebook has been one of the best-performing large-cap stocks in the market, CNBC reported.

The firm says Facebook is facing digital ad saturation risk as large companies are "scrutinizing" their marketing budgets.

"We think that the market is looking at upside potential without appropriately considering risks to growth," analyst Brian Wieser wrote in a note to clients Friday. "With every passing year, digital advertising is closer to a point where the market is saturated."

Pivotal reduced its rating on Facebook shares to “hold” from “buy” on Feb. 1. Facebook shares have rallied 29.4 percent since the earlier downgrade.

Pivotal's dire outlook is in complete contrast to what some other market experts predict.

Facebook shares could rise 16 percent to $200 within a year, the newspaper Barron's said in its July 31 edition, as the social media company's profits ramp up and it expands its reach in video advertising.

Barron's said Facebook's spending will rise in order to build more potentially lucrative advertising into its video, Instagram and Messenger platforms.

Revenue growth will slow and the company will face anti-trust concerns as well as stiff competition, but its earnings per share are still expected to more than double over the next five years, according to the newspaper.

"The stock is up 40% since Barron’s recommended it nearly a year ago (“Facebook Can Climb More Than 20%,” Aug. 20, 2016). At a recent $173, it trades at 33 times this year’s earnings consensus. Bubbly? Not yet," Barron's reported.

"Expect revenue growth to slow but remain impressive. It also holds cash and investments worth $35 billion, or 7% of its stock market value. Barring a change to corporate taxes, expect that figure to swell, and the overall tax rate to drop, as the company earns more overseas," the report said.

Facebook shares closed at $172.45 on Friday, up nearly 50 percent this year.

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
InvestingAnalysis
An analyst at a small research firm reportedly is doubling down on his negative call for Facebook shares, predicting nearly a 20 percent drop.Pivotal Research lowers its rating for Facebook to "sell" from "hold," despite the fact that Facebook has been one of the...
facebook, rating, share price, stock, sell
351
2017-30-31
Monday, 31 July 2017 03:30 PM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved