DJ Facebook Stock Will Get a Boost From Investments in Platform and Security, Analyst Says -- Barrons.com
By Jon Swartz
Facebook has repeatedly vowed to shore up its platform, and Chief Executive Mark Zuckerberg in February said the price tag will exceed $3.7 billion on safety and security measures this year.
The investment in more security personnel and technology like artificial intelligence and data storage is well worth it, writes Guggenheim analyst Michael Morris, who expects the digital cleanup to aid Facebook in the long run.
The immediate payoff should come April 24, when Facebook (ticker: FB) reports fiscal first-quarter earnings after the market closes. Morris expects the social-media giant to report earnings of $1.97 per share on revenue of $15.24 billion. Analysts polled by FactSet expect earnings of $1.61 per share and revenue of $14.97 billion.
"We believe investors will continue to gain comfort with the incremental financial risk created by content and privacy concerns while at the same time usage trends have remained solid," Morris said in a note Thursday that maintains a Buy rating and price target of $200.
Facebook shares were flat at $177.67 in trading Thursday.
"We believe that the company is now proactively addressing bad actors on its properties," said Morris, who also sees monetization opportunities for Facebook in commerce, messaging, and video. "We also believe that consumers increasingly understand the potential privacy, security and harmful/extreme content risks of engaging with the platforms."
Then again, headlines make it difficult for consumers and regulators not to notice. Late Wednesday, Facebook acknowledged it might have "unintentionally uploaded" email contacts of as many as 1.5 million users on the site without their permission or knowledge dating to May 2016.
"We've fixed the underlying issue and are notifying people whose contacts were imported," Facebook said in a statement following a report by Business Insider. "People can also review and manage contacts they share with Facebook in their settings."
Write to Jon Swartz at jonathan.swartz@dowjones.com
(END) Dow Jones Newswires
April 18, 2019 12:24 ET (16:24 GMT)
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