Facebook’s Price Target From Wedbush Cut to $220 From $250, Outperform Rating Maintained

Facebook (FB) received a price-target cut from Wedbush after the social-network operator reported Q3 earnings per share above analysts’ expectations late Tuesday but missed the Street’s mean estimate for revenue.

Wedbush’s new price target on Facebook’s shares is $220 per share, down from $250. The reduced target is still well above the stock’s Tuesday closing price of $146.22 as Wedbush kept its investment rating on the stock at outperform. The shares rose 4.8% to $153.27 in recent Wednesday pre-market trading.

In a note to clients, Wedbush said while Facebook’s Q3 EPS benefited from a lower-than-expected tax rate, “the revenue shortfall relative to our and consensus expectations appeared to be driven by more modest ad pricing growth of 7% in the quarter, down from growth of 17% in Q2:18, 39% in Q1:18, and 43% in Q4:17.”

The firm added: “Taken together, Facebook’s Q3 results suggest that mix shift toward lower-monetized ad formats and geographies (e.g. Stories and Asia) are weighing on near-term growth rates while these products and territories continue to scale.”

After Tuesday’s market close, Facebook reported Q3 EPS of $1.76, up from the year-earlier period’s $1.59 and above analysts’ mean estimate according to Capital IQ of $1.45. Total revenue rose to $13.73 billion from $10.33 billion a year earlier, but missed the Street’s mean estimate of $13.82 billion.