Facebook Inc.’s (FB) stock has risen steadily over the past four months, outperforming the S&P 500 and rising by approximately 12.4% in comparison to the S&P’s decline of about 50 basis points. Hedge Funds were actively buying the stock in the first quarter, causing this social network company’s ranking to elevate to sixteen on the WhaleWisdom Heatmap.
Facebook has encountered some lost advertising revenue in recent months due to the impact of the coronavirus pandemic on many customer businesses, as well as political drama. It appears there is still considerable interest from customers looking to stay connected with family, friends, and colleagues during a time of social distancing. Overall, the company seems to be weathering the storm.
Hedge Funds Are Active
Hedge funds were buying the shares in the first quarter, helping it to rise on the WhaleWisdom Heatmap. During the quarter, the aggregate 13F shares held by hedge funds increased to approximately 696.7 million from about 667.2 million. Of hedge funds, 70 created new positions, 230 added to existing ones, 66 exited, and 208 reduced their holdings. In slight contrast, institutions decreased their aggregate holdings to about 1.84 billion from 1.86 billion.
Positive Estimates for Facebook
Analysts appear optimistic about the company’s second quarter revenue outlook on July 29. Based upon input from thirty-four analysts, year over year revenue growth for the second quarter is estimated at 2.8%, with revenue for the period climbing to approximately $17.4 billion. However, earnings are forecast to have plunged by 31.2% to $1.37 per share. JPMorgan Chase & Co.’s analyst, Doug Anmuth, has a favorable outlook for Facebook and raised the price target to $290 from $245 while maintaining an Overweight rating on the shares. Anmuth believes that online advertising spending will come back, though perhaps not quite to pre-pandemic levels. Stephen Ju of Credit Suisse Group also raised the price target for Facebook up to $305 from $258. Additionally, Baird & Co.’s analyst, Colin Sebastian, believes that Facebook will see a recovery in advertising spending; Sebastian has an Outperform rating on the stock with a $300 price target.
Favorable Outlook Ahead
Facebook demonstrated true upward momentum over the past four months, following a rocky start to the calendar year 2020, related primarily to the impact of the pandemic on its advertising revenue. Though there may still be both peaks and valleys ahead for the social media giant, analysts’ estimates are favorable, and investors have good reason to remain optimistic about the equity.