Facebook: BMO Anticipates Several Headwinds To Hit Top Line

On October 25th, Facebook (NASDAQ: FB), now called Meta Platforms, reported their 2021 third quarter financial results. For the third quarter, the company reported revenues of $29.01 billion, flat quarter over quarter but up from $21.47 billion last year.

This is below the $29.56 billion consensus estimate. The company reported gross margins of 80.1%, flat year over year and quarter over quarter, while operating margin came in at 35.9%, down quarter over quarter but in line with last year’s margin. Lastly, the company reported a net income of $9.19 billion or 31.7% and earnings per share of $3.22. Slightly higher than the $3.19 consensus estimate.

After the results, many analysts lowered their 12-month price targets, bringing the 12-month average price target to $402.76, down from the $417.22 before the results. Meta Platforms currently have 58 analysts covering the stock with 18 analysts having a strong buy rating, 30 have buys, 8 have hold ratings and 2 have sell ratings on the stock. The street high sits at $466 from Tigress Financial Partners while the lowest sits at $250.

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In BMO Capital Market’s third quarter review, they reiterated their $425 12-month price target and Outperform rating saying, “There is no material change in our view, and no change to our revenue outlook, as commentary on the ATT’s impact was large as expected.”

On the results, Facebook reported $28.3 billion in ad revenue, $1 billion lower than BMO’s estimate, while quarter-over-quarter impression growth accelerated to +9% and average price grew to +22%, although slightly lower than their +26% estimate. Operating income slightly missed BMO’s $10.9 billion estimates, while earnings per share beat their $3.15 estimate.

For the fourth quarter, BMO expects COVID-19, Apple Ad changes, and macro supply shortages to impact their top-line. Because of this, they expect fourth quarter revenue to be $31.5 – $34 billion. After management gave more clarity on these headwinds, BMO has elected to slightly lower Facebook’s fourth quarter operating income.

Below you can see BMO’s updated 2021 and 2022 full-year estimates.


Information for this briefing was found via Edgar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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