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Fly News Breaks for March 20, 2018
Mar 20, 2018 | 07:34 EDT
Facebook is taking proactive steps to address the Cambridge Analytica situation and broader data protection concerns through business model iteration, UBS analyst Eric Sheridan tells investors in a research note. Longer term changes in the regulation of social media platforms and the collection/use of fist party data remain the main risk factor for Facebook, the analyst adds. He believes, however, that "current positive ad trends" run counter to investor fears. Sheridan keeps a Buy rating on Facebook with a $215 price target.
News For FB From the Last 2 Days
Apr 25, 2018 | 16:22 EDT
Facebook shares are up $7.30, or 4.5% to $167 in after hours trading.
Apr 25, 2018 | 16:08 EDT
"Despite facing important challenges, our community and business are off to a strong start in 2018. We are taking a broader view of our responsibility and investing to make sure our services are used for good. But we also need to keep building new tools to help people connect, strengthen our communities, and bring the world closer together," said CEO Mark Zuckerberg.
Apr 25, 2018 | 16:07 EDT
Facebook announced that it has increased the amount authorized under its share repurchase program by an additional $9B. The board of directors originally authorized repurchases of up to $6B of its Class A common stock under the repurchase program, and this increase is incremental to the original authorization, Facebook stated.
Apr 25, 2018 | 15:38 EDT
Facebook options active ahead of earnings. The stock off 20c to $159.50 and 11K Jul 175 calls traded for $3.50. Later, another 4K for $3.70. 17K trade total against 3.7K open interest and the bullish activity opens a block struck 9.5% above spot (9.3% below Feb 1st 52-week highs of $193.09). Nearly 17K Apr 27th 170 calls also changed hands. Apr 27th 150 puts, May 160 calls, and Apr 27th 165 calls are next most active. Total volume is 250K calls and 185K puts. 30-day implied volatility is down 5% to 36 and in the 93rd percentile of the 52-week range. Lastly, the Apr 27th ATM straddle equals almost 6% of spot and compares to average daily post-earnings moves of 3.1% over the past two years. The previous report triggered a +3.3% reaction to the aforementioned 52-week highs of $193.09 on 2/1. The next report is after the closing bell today.
Apr 25, 2018 | 14:20 EDT
Notable companies reporting after the market close, with earnings consensus, include Facebook (FB), consensus $1.35... Visa (V), consensus $1.02... AT&T (T), consensus 87c... PayPal (PYPL), consensus 54c... QUALCOMM (QCOM), consensus 70c... Las Vegas Sands (LVS), consensus 85c... Ford Motor (F), consensus 41c... eBay (EBAY), consensus 53c... Aflac (AFL), consensus 97c... ServiceNow (NOW), consensus 37c... Align Technology (ALGN), consensus 98c... O'Reilly Automotive (ORLY), consensus $3.58... Xilinx (XLNX), consensus 66c... BioMarin Pharmaceutical (BMRN), consensus (18c)... Equifax (EFX), consensus $1.37... Citrix Systems (CTXS), consensus $1.05... AMD (AMD), consensus 9c... Chipotle Mexican Grill (CMG), consensus $1.57... F5 Networks (FFIV), consensus $2.27... Knight-Swift Transportation (KNX), consensus 40c.
Apr 25, 2018 | 13:35 EDT
A Facebook (FB) spokesman said that the social media giant has declined an invitation to testify at a U.S. House of Representatives hearing Thursday on filtering practices by social media companies, Reuters reports. The company noted that, even though it will not be present at the hearing, it looks "forward to a continuing dialogue with members of the committee about Facebook's strong commitment to being a platform for all voices and ideas," the report says. Alphabet (GOOG) and Twitter (TWTR) were also invited to testify at the hearing, but have yet to say whether they will appear, the report notes. Reference Link
Apr 25, 2018 | 10:50 EDT
Facebook (FB) is scheduled to report results of its first fiscal quarter after market close on April 25, with a conference call scheduled for 5 pm ET. What to watch for: 1. FALLOUT FROM CAMBRIDGE CONTROVERSY: On April 10 and 11, Facebook (FB) CEO Mark Zuckerberg testified before committees of the House of Representatives and Senate in the wake of the Cambridge Analytica data scandal. The executive reiterated that an ad supported service is still the best business model for the company and said he sees areas of potential legislation that he views as worthwhile to consider. Afterward, the Wall Street Journal reported, citing Facebook VP of global marketing solutions Carolyn Everson, that the company does not expect to see a significant sales impact from the uproar over its users' digital privacy. The social media site, which also does not expect tougher privacy laws to cut into its ad sales, said users largely have not changed their privacy settings in recent weeks, the Journal added. Investors will certainly be intent on learning if the prospects for increased U.S. and European regulations, as well as their potential impact on the company and its financials, lead Facebook to change any of its guidance. 2. ACTIVE USERS: In addition to listening for any explicit changes in guidance, investors will be evaluating if the Cambridge Analytica scandal appeared to have any impact on Facebook's active user growth metrics. Last quarter, Facebook reported Q4 daily active users of 1.40B on average for December, an increase of 14% year-over-year. Monthly active users were 2.13B as of December 31, 2017, an increase of 14% year-over-year. If those growth rates of 14% each for daily and monthly active users decelerate, the company is sure to face questions about how much of that slowing may be due to the data handling debacle and #deleteFacebook movement. 3. DEBACLE DELAYING LAUNCH: On April 23, DigiTimes reported that the launch of Facebook's (FB) smart speaker has been delayed to October after CEO Mark Zuckerberg was summoned to testify on the company's privacy issues in the U.S. According to the report, Facebook is readying two smart speakers codenamed Fiona and Aloha, both equipped with a 15-inch in-cell panel. 4. ANALYSTS TRIM TARGETS, STAY BULLISH: Recently, Credit Suisse analyst Stephen Ju lowered his price target on Facebook to $230 from $240 ahead of the company's Q1 earnings release, stating that he "struggles for reasons as to why" his near-to-medium term estimates should materially change following advertiser conversations, which suggest little in the way of changes to budget allocations to Facebook. Stepping back from the recent controversy, Ju said he remains a buyer of Facebook shares and notes that his long-term thesis has not really changed. Meanwhile, Deutsche Bank analyst Lloyd Walmsley said he sees Facebook's Q1 earnings report as unlikely to be a positive catalyst for the shares given that the stock has already rebounded considerably from recent lows. Further, investors are unlikely to get meaningful comfort around the impact of Europe's General Data Protection Regulation until the Q2 report, Walmsley said in a pre-earnings research note. He also wouldn't be surprised to hear a "cautious revenue outlook" from Facebook on the call. However, looking out longer term, the analyst sees Facebook shares as attractive. Walmsley keeps a Buy rating on the name, as do almost all firms on Wall Street. Bloomberg data shows that among all analysts who updated their Facebook targets in the last 12 months, 42 out of 46 have Buy or equivalent ratings.
Apr 25, 2018 | 07:18 EDT
As previously reported, Stifel analyst Scott Devitt upgraded Alphabet (GOOGL) to Buy from Hold, stating that he is increasingly comfortable with Alphabet's positioning in digital media relative to Facebook (FB)given Alphabet's private relationship with consumers and the high utility and durability of Google's core business. Also, he sees the reset of 2018's outlook following yesterday's earnings, and resulting pullback in shares, offering a reasonable buying level for shares. Devitt maintains his $1,234 price target on Alphabet.
Apr 24, 2018 | 16:27 EDT
Stocks opened with gains thanks to a few solid earnings reports from some of the nation's bellwether companies. Caterpillar (CAT) reported much better than expected earnings and revenues and raised its guidance for the full year and its stock price initially moved sharply higher. However, on the company's conference call, the CEO said the first quarter would be the high-level mark for the year and sellers moved in selling the stock, taking the Dow down with it. From there the averages saw a broad-based selloff, with little sign of investors stepping in to buy the dip prior to the next round of reports due after the close. ECONOMIC EVENTS: In the U.S., the Case Shiller 20-City home price index rose 0.74% to 206.67 for February. The FHFA home price index rose 0.6% to 261.1 in February. The Richmond Fed manufacturing index plunged 18 points to -3 in April, hitting its lowest reading since September 2016. The Conference Board consumer confidence index increased to 128.7 in April, up from 127.0 in March. COMPANY NEWS: Class A shares of Google parent Alphabet (GOOGL) declined about 5% after the internet giant's earnings report was followed by several Wall Street analysts trimming their price targets, citing the company's plans to keep investing heavily in 2018. Following the report, other FAANG stocks were trading lower, with Facebook (FB), Amazon (AMZN), Apple (AAPL) and Netflix (NFLX) sliding in a range of 1% to about 4%... Six members of the Dow Jones Industrial Average reported this morning before the open. Caterpillar shares, which looked like they would head higher, reversed during the company's earnings call amid cautious commentary from executives. At the close, shares of the heavy equipment maker finished 6% lower. Verizon (VZ), meanwhile, rose 2%, while United Technologies (UTX) fell 1%. Coca-Cola (KO) and Travelers (TRV) were down 2% and 3%, respectively, while 3M (MMM) was also an underperformer with a 7% decline following its guidance reduction. MAJOR MOVERS: Among the noteworthy gainers was Mitel (MITL), which rose 9.5% after it agreed to be acquired by an investor group led by affiliates of Searchlight Capital Partners. Also higher were Sanmina (SANM) and Heidrick & Struggles (HSII), which gained a respective 14.6% and 17% after reporting quarterly results. Among the notable losers was Epizyme (EPZM), which fell 15% after it said that U.S.-based enrollment of new patients into tazemetostat clinical trials has been temporarily put on hold by the FDA. Also lower were Freeport McMoRan (FCX) and Polaris Industries (PII), which fell a respective 14.5% and 9% after reporting quarterly results. INDEXES: The Dow fell 424.56, or 1.74%, to 24,024.13, the Nasdaq lost 121.25, or 1.70%, to 7,007.35, and the S&P 500 declined 35.73, or 1.34%, to 2,634.56.
Apr 24, 2018 | 14:42 EDT
Leadership in the tech-heavy Nasdaq-100 index (QQQ) is under pressure, as selling in some of the most popular names -- including Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX), and Alphabet (GOOG GOOGL) -- is intensifying in afternoon trading. ANALYSTS UNEASY AFTER ALPHABET: After the close of trading Monday, Alphabet reported Q1 net profit up 73% to $9.4B for the quarter, compared to $5.4B last year. Despite Alphabet's strong Q1 report, some analysts are concerned about the tech giant's increased willingness to spend. Citing costs, Alphabet reported Q1 operating margin of 22%, missing expectations and down from the 27% in the year-ago quarter. The core takeaway is that Google continues to demonstrate "remarkable" sales strength, while heavily investing, said Piper Jaffray analyst Sam Kemp in a post-earnings research note. He sees these investments as unlikely to abate in 2018. CAP-EX SWELLING: Capital expenditures at Google spiked to $7.3B in Q1 from $2.5B in the year-ago quarter. The blames the spending in part on acquiring streaming rights for YouTube's new TV service and other marketing expenses. Deutsche Bank analyst Lloyd Walmsley told investors in a note that cost growth continues to surprise in excess of revenue. Walmsley lowered his price target for Alphabet to $1,225 but kept a Buy rating on the shares following the Q1 results. He expects the shares to be volatile in the near-term, pending more signs of stabilizing margins. WAYMO CATALYST: JPMorgan analyst Doug Anmuth reiterated an Overweight rating on shares but lowered his price target for Alphabet to $1,285 from $1,330. Anmuth said that accounting changes and higher spending may drive the bulk of near-term discussion. BMO Capital analyst Daniel Salmon kept his Market Perform rating and $1,100 price target on Alphabet after the company's Q1 results, saying that while revenues came in "solid", margins were "weak again" and could remain pressured as the company spends more to address inappropriate content on YouTube. The analyst said earlier this trend is being "increasingly embedded" in investors' expectations, requiring a notable "new story" like Maps monetization or Waymo commercialization to produce "material stock outperformance." PRICE ACTION: Shares of Alphabet Class A are near session lows, down over 5% to $1016.68 per share: OTHER FANG NAMES FALL: Also lower are Facebook, down almost 4%, and Amazon and Netflix, losing over 4%. Apple is faring slightly better, down almost 2% in afternoon trading.
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