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FB

Facebook

$172.45

2.01 (1.18%)

, GOOG

Alphabet

$941.53

7.44 (0.80%)

10:19
07/31/17
07/31
10:19
07/31/17
10:19

Analyst says sell Facebook with Google ruling a worrying precedent

Pivotal Research analyst Brian Wieser downgraded Facebook (FB) to Sell as he thinks the market is looking at upside potential without appropriately considering risks to growth. The analyst also fears that the recent European Commission ruling on Google (GOOG; GOOGL) Shopping and its approach to dominant companies in general will pose a "greater risk" as Facebook becomes larger. SELL FACEBOOK: In a research note to investors, Pivotal Research's Wieser downgraded Facebook to Sell from Hold, with a $140 price target. The analyst pointed out that over the course of this year, the stock has risen "dramatically," while his outlook on the stock has not given a "decent" second quarter and an outlook that appears consistent with expectations. Risks have become more pronounced, Wieser noted, but investors are not fully accounting those risks. The analyst argued that viewability remains a concern for Facebook as he thinks few advertisers are aware of low levels of viewability are on the platform. Further, with every passing year, digital advertising is closer to a point where the market is saturated, he contended. While a premium video investment strategy could help improve growth, the analyst believes it will do so with "significantly lower margins" than existing advertising products, and it will likely take significant time and investment for these efforts to become material, if they ever do. Nonetheless, Wieser continues to expect Facebook will execute well, grow its business, expand its share of wallet from most advertisers on core Facebook, Instagram and Facebook Audience Network. He also sees great long-term value in Messenger and WhatsApp, although those platforms will not likely be monetized aggressively in the near-term. REGULATORY ISSUES: Since the beginning of the year, Pivotal Research's Wieser has seen greater uncertainty around macroeconomic and public policy issues in the U.S. and many countries around the world. Additionally, he told investors that while Facebook itself has not been impacted directly from any regulatory issues, the recent European Commission ruling on Google Shopping and its approach to dominant companies in general poses a "greater risk" as Facebook becomes larger. On June 27, the European Commission announced its decision that certain actions taken by Google regarding its display and ranking of shopping search results and ads infringed European competition law, and imposed a $2.74B fine, which the company accrued in the second quarter of 2017. Additionally, the analyst pointed out that European Commission's consumer privacy policy rules, set for implementation in May of next year, could have negative implications for both Google and Facebook due to the limitations the policy will impose on how the two companies secure rights to consumer data and subsequently use that data for ad targeting. PRICE ACTION: In morning trading, shares of Facebook have dropped over 1% to $170.15.

FB

Facebook

$172.45

2.01 (1.18%)

GOOG

Alphabet

$941.53

7.44 (0.80%)

GOOGL

Alphabet Class A

$958.33

5.82 (0.61%)

  • 16

    Aug

  • 18

    Aug

  • 13

    Sep

FB Facebook
$172.45

2.01 (1.18%)

07/31/17
07/31/17
DOWNGRADE

On The Fly: Top five analyst downgrades
Catch up on today's top five analyst downgrades with this list compiled by The Fly: 1. Facebook (FB) downgraded to Sell from Hold at Pivotal Research with analyst Brian Wieser saying the shares are not factoring in risks to the company's growth following their "remarkable run" this year. 2. Ulta Beauty (ULTA) downgraded to Perform from Outperform at Oppenheimer with analyst Rupesh Parikh saying softer commentary from L'Oreal on its earnings call, increasing promotional activity from the department store channel, and more difficult year-over-year comparisons "could now signal a potentially more challenging beauty backdrop going forward." 3. Hertz (HTZ) downgraded to Underweight from Equal Weight at Barclays with analyst Brian Johnson saying fundamentals may have bottomed, but the stock is ignoring the challenges ahead in the company's earnings recovery following the nearly 100% rally since June 21. 4. Citi (C) downgraded to Market Perform from Outperform at BMO Capital with analyst James Fotheringham citing valuation and lack of catalysts. 5. Visteon (VC) downgraded to Neutral from Buy at UBS with analyst Colin Langan saying the risk/reward is more balanced with the shares up 60% over the last year. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.
07/31/17
PIVT
07/31/17
DOWNGRADE
Target $140
PIVT
Sell
Facebook downgraded to Sell from Hold at Pivotal Research
Pivotal Research analyst Brian Wieser downgraded Facebook (FB) to Sell with an unchanged price target of $140. The social network closed Friday up $2.01 to $172.45. The shares are not factoring in risks to the company's growth following their "remarkable run" this year, Wieser tells investors in a research note. The recent European Commission ruling on Google (GOOG, GOOGL) Shopping and the agency's approach to dominant companies in general poses a greater risk as Facebook becomes larger, the analyst contends.
07/27/17
NEED
07/27/17
NO CHANGE
Target $185
NEED
Buy
Facebook 'strong over-delivery' a negative for Snap, says Needham
Needham analyst Laura Martin believes Facebook's (FB) "strong over-delivery" of Q2 earnings is negative for Snap (SNAP) because Instagram Stories hit 250M DAU's in Q2, well above Snap's 166M DAU's in Q1. The analyst reiterates a Buy rating and $185 price target on Facebook's shares.
07/27/17
JMPS
07/27/17
NO CHANGE
JMPS
Facebook price target raised to $195 from $170 at JMP Securities
JMP Securities analyst Ronald Josey believes that Facebook's Q2 results shows that higher ad prices can offset declines in ad loads. The analyst says that the company's "core fundamentals" are strong, and he keeps an Outperform rating on the shares.
GOOG Alphabet
$941.53

7.44 (0.80%)

07/25/17
CANT
07/25/17
NO CHANGE
CANT
Alphabet reported 'solid' Q2 results, says Cantor
Cantor analyst Kip Paulson says that Alphabet reported "solid" Q2 results, as he believes that its earnings "featured....sustained underlying momentum and broad-based global strength." The analyst says that "slightly lower gross margins" due to high TAC will be "offset" by faster revenue growth "over time." Calling the stock's valuation "compelling," he raised his price target on the name to $1,100 from $1,070 and .keeps an Overweight rating. .
07/25/17
NEED
07/25/17
NO CHANGE
Target $1100
NEED
Buy
Alphabet price target raised to $1,100 from $1,050 at Needham
Needham analyst Kerry Rice raised his price target for Alphabet to $1,100 from $1,050 following the company's Q2 "solid" results. While the analyst expects the light net ad revenue coupled with the recent run-up in share price will likely cause a pullback, he believes this is a buying opportunity as Alphabet's fundamentals remain intact. Rice reiterates a Buy rating on the name.
07/25/17
BARD
07/25/17
NO CHANGE
Target $1100
BARD
Outperform
Baird says buy Alphabet at current levels with shares at discount
Baird analyst Colin Sebastian said Alphabet reported solid Q2 results slightly above consensus, consistent with his positive checks. The analyst said the results were driven primarily by healthy core advertising revenues and increasing contributions from YouTube, Google Cloud, and Hardware. He said Alphabet is underperforming peers year-to-date and trading at a discount, so he remains a buyer at current levels. Sebastian reiterated his Outperform rating and $1,100 price target on Alphabet shares.
GOOGL Alphabet Class A
$958.33

5.82 (0.61%)

07/26/17
TIGR
07/26/17
NO CHANGE
TIGR
Alphabet recent weakness a buying opportunity, says Tigress Financial
Tigress Financial analyst Ivan Feinseth reiterated his Strong Buy rating on Alphabet and views recent weakness as a buying opportunity. Feinseth said Alphabet's Business Performance remains strong driven by consistent revenue growth and market share gains, and continues to benefit from strength in mobile search and YouTube advertising. He expects growth to continue with cloud product offerings and sees continued improvement in return on capital producing greater profit growth and shareholder value creation.

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DE

Deere

$145.25

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SECO

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BASFY

BASF

$27.39

-0.13 (-0.47%)

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RBS

RBS

$7.30

-0.04 (-0.54%)

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