Another Analyst Cuts Facebook Stock Price Target

By David Cohen 

Another analyst lowered his price target for Facebook shares Friday, as Anthony DiClemente of Barclays Capital slashed his number from $31 per share to $23, citing concerns over mobile monetization.

As reported by Forbes, DiClemente’s 2012 earnings-per-share forecast of $0.41 remained unchanged, and he lowered his 2013 outlook from $0.43 to $0.41, while the industry consensus for the two years is $0.49 and $0.63, respectively.

DiClemente wrote, as reported by Forbes:

With a lack of evidence from Facebook around significant traction in its mobile monetization strategy, we are revising our estimates and lowering our price target.

The rapid deceleration in Facebook’s ad impression growth in the second quarter is concerning and largely a function of the mobile shift, in our view. Although pricing is increasing, we believe Facebook would need to significantly grow pricing on mobile to maintain a robust growth trajectory for ad revenue. Moreover, we believe gaming continues to shift away from the desktop to mobile, which Facebook has difficulty in monetizing. Accordingly, we are modestly lowering our estimates for both advertising and payment revenue.

Although Facebook announced that it will settle its $1.9 billion tax bill without selling its 101 million withheld shares, and Mark Zuckerberg will not sell any shares for at least 12 months, there are still 1.2 billion shares subject to lock- ups expiring over the next nine months. Given that Facebook’s share price has fallen more than 10 percent since the day before its first lock-up expired Aug. 16, we expect the potential number of shares into the market to remain a technical headwind.

Readers: Do you agree or disagree with DiClemente’s reasoning?

Image courtesy of Shutterstock.