Analysts upgrade Facebook, stock reaches four-month high

Facebook has had a rough year. Since going public at $38 a share on May 18, the social networking company’s stock price has fallen about 12 points or 31 percent.

But earlier this week, Facebook’s (FB) stock price rose more than 8 percent after some analysts upgraded their recommendations on the stock. By midday trading Wednesday, the stock was sitting at $26.23, the highest it’s been since July.

Why did analysts upgrade the stock? In short, because they think Facebook could beat fourth quarter estimates.

Rich Greenfield, with BTIG, upgraded the stock from sell to neutral Monday morning, reported Business Insider. He said he believes Facebook’s revenue will “explode” in the fourth quarter because the company is placing more advertisements in the mobile app’s news feed. Greenfield estimates that fourth quarter ad revenue will increase 42 percent and total revenue will increase 37 percent to $1.55 billion. He didn’t upgrade the stock to buy because he thinks Facebook’s ads and sponsored stories will end up annoying users in the long run.

Here’s the video that Greenfield posted about Facebook, courtesy of Business Insider.

Carlos Kirjner, with Bernstein Research, also upgraded the stock rating to outperform. He wrote that Facebook’s revenue “is on the path to beat consensus revenues over the next 12 to 24 months,” Marketwatch reported.

Kirjner and Greenfield’s upgrades are particularly notable because for months they have been recommending investors to sell Facebook’s stock, reports Business Insider.

Currently, 63.2% of analysts surveyed by Bloomberg recommend investors buy Facebook stock. That’s up about 3 percent from last week. Also,¬†31.6% ¬†recommend holding the stock and 5.4 percent recommend selling the stock.

 

Author:Anika Anand

Anika Anand is a student at the City University of New York Graduate School of Journalism specializing in business and economics reporting. Check out her portfolio at anikaanand.com.

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