Facebook Inc. is due to release it second quarter earnings report after close of on Wednesday with analysts expecting an increase of more than 10% on the EPS of a year ago.
These expectations come on the back of an increased emphasis and a subsequent improvement of the company's advertising prowess, particularly in the lucrative video advertising market. Analysts are expecting video to be a major driver in the increased earnings that they are forecasting.
Meanwhile, Wall Street analysts anticipate earnings of 47 cents per share, this against the figure of 42 cents a share in the Q2 report of 2014. Estimize, which uses crowdsourcing to compute earnings, includes estimates from hedge-fund executives, brokerages and analysts, both sell side and buy side, has a more optimistic forecast of an EPS of 49 cents.
Also, sell side analysts are forecasting revenue of $4 billion for the second quarter which, if achieved, will be a growth of 38% over the second quarter revenue in the same period last year.
The last three months have seen the Facebook (FB, +0.57%) share price growing steadily to increase by 15% over the period. Raymond James has raised its price target from $90 to $110 and has maintained its outperform rating. Cantor Fitzgerald confirmed a buy rating on Monday with a target price of $100 on the stock. A survey of more than 45 analysts by FactSet revealed an average rating of “buy” while a target price of $99.62 was the consensus figure from the survey.
Facebook has only failed to meet analyst sales expectations and earnings per share once since its stock market debut in 2012,a nd this happened way back in the first quarter of 2013.
The result of regularly beating Wall Street forecasts means that Facebook may need to report revenue of $4.05 billion, according to Bank of America Merrill Lynch, in order to maintain its stock momentum.
During the past two years, the Facebook success story has ridden on the back of mobile, and Cantor Fitzgerald's Youssef Squali believes the contribution from video ads will start to be more obvious from this quarterly report.
Other Facebook assets such Instagram, WhatsApp, Messenger and Oculus, also have potential for further growth going forward according to Squali.
MT4 Chart: Facebook