Apple shares tumble, but analysts still bullish

2:30 PM analysts, Apple, bullish, Shares, still, tumble No Comments

Shaw Wu, Sterne Agee senior technology analyst, thinks Apple's 10 percent correction makes it "right to get back in" the stock.

Shares of Apple have tumbled as much as 11.6 percent from their recent iPhone 5 high, but analysts remain bullish about the company’s long-term prospects.

Apple shares fell 2.3 percent in morning trading Tuesday, putting the stock in correction territory, broadly defined as when a share price has fallen more than 10 percent.

Apple’s shares began falling after they reached an all-time high of $705.07 on Sept. 21 -- the day the iPhone 5 was launched.

Despite the recent losses it’s worth remembering that Apple’s share price has been on a roll so far this year.

Apple moved above $700 for the first time ever on Sept. 18, and the stock is up an impressive 21.1 percent since hitting a recent closing low on May 17.

“In the near-term, there’s definitely some consolidation in the name,” Shaw Wu, technology analyst at Sterne Agee, told CNBC.

“Negative headlines out there, including Foxconn and minor complaints about the iPhone 5, are also causing some concern in the company,” Wu added. “Broader concerns with the economy are not helping either.”

Apple’s declining share price has also weighed on the broader market, as the company’s stock accounts for nearly 20 percent of the Nasdaq 100 index and almost 5 percent of the S&P 500 index.

Brian Marshall, analyst at ISI Group, is optimistic about the outlook for Apple’s stock.

“Fundamentals are moving in the right direction and this is one of those periods where we see a consolidation,” he told CNBC. “The stock continues to have legs so I think we’ll get up into $700.”

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Analysts ‘liking’ Facebook’s long-term outlook

8:30 AM analysts, Facebooks, liking, longterm, outlook No Comments

Andre Sequin, RBC Capital Markets, explains his 'outperform' rating on Facebook.

One month after Facebook’s tumultuous public stock offering, Wall Street analysts are unveiling their outlooks for the No. 1 social network — and most are sounding a note of muted optimism.

More than a dozen analyst reports on Facebook hit the street Wednesday, marking 40 days since the company’s first day of trading on May 18, when Facebook became the first U.S. company to debut with a market value of more than $100 billion. Under securities law, the 33 banks that took part in Facebook’s IPO had to wait that long before publishing their views.

In reports from banks such as Morgan Stanley and Goldman Sachs, analysts said they are generally upbeat about the long-term outlook for the company, given its 901 million users. Many of the analysts also said they think Facebook can grab a significant slice of the Internet advertising market.

However, there was also a note of caution about Facebook’s business model and its ability to make money from the growing number of users who log on to the service using a mobile device.

Oppenheimer analyst Jason Helfstein set a price target of $41 for Facebook’s stock price over the next 12 months, suggesting upside potential of 24 percent compared with its close of $33.10 on Tuesday.

Helfstein said a price of $41 was a reasonable target and not overly aggressive, adding that he thinks some of the estimates for Facebook’s stock price were too high. Still, Facebook’s stock will be attractive to long-term investors, he told CNBC.

“Are we saying buy the stock, make money tomorrow? No,” he said, adding that investors who hold on to it for a long time will likely make money.

Shares of Facebook fell to a low of $25.87 on June 6, down 32 percent from the company’s initial offering price of $38. But they have since recovered some of their lost ground and are up 27 percent from that early June low.

Facebook’s IPO was one of the most highly anticipated stock offerings of recent years, but it had an inauspicious start.

A first-day trading glitch delayed its first trades, leading to complaints of slow order confirmations and too many shares offered at too high a price. Subsequent lawsuits have alleged that the Nasdaq botched the offering and that deal underwriters Morgan Stanley and others failed to share lowered earnings forecasts with retail investors before the IPO.

Morgan Stanley, J.P. Morgan Securities, Goldman Sachs, RBC Capital Markets, Piper Jaffray, Oppenheimer and William Blair began coverage of Facebook with their top ratings, while analysts at BofA Merrill, Barclays Capital, Raymond James, Stifel Nicolaus, Lazard Capital Markets and Citi Investment Research & Analysis gave the company’s stock a less-sanguine “hold,” “market-perform,” or equivalent rating.

Goldman Sachs set a share price target of $42 for Facebook, while RBC said it expected a run to $40. BofA Merrill Lynch and Morgan Stanley pegged the shares at $38, and Citi and Barclays opted for a price $35.

However, BMO Capital Markets bucked the relatively upbeat trends and began coverage of Facebook with an “underperform,” -- its lowest -- and set a share-price target of $25.

Perhaps the greatest challenge to Facebook’s future growth is its ability to find a growing source of revenue, particularly from the growing mobile sector.

The social network appears to have already lost one potential source: Last week, Facebook agreed to a $20 million settlement in a California lawsuit claiming it publicized that some of its users had “liked” certain advertisers but didn't pay the users, or give them a way to opt out.

The so-called “Sponsored Story” feature on Facebook is essentially an advertisement that appears on the site and includes a member’s Facebook page and generally consists of another friend’s name, profile picture and a statement that the person “likes” that advertiser. Dumping the “Sponsored Stories” feature could cost Facebook $103.2 million in lost revenue.

On the mobile side, about 20 percent of Facebook’s current user base is in the U.S. and Canada, and half of those users are accessing the site using mobile devices, through which Facebook derives much less advertising revenue than through a desktop PC.

What’s more, markets where Facebook is growing most rapidly -- in Europe and Asia -- bring the company less revenue. Facebook brings in $3 per user in the U.S. and in Canada, but only $1.50 in Europe and just 50 cents in Asia.

In established markets, such as the U.S. and Canada, revenue growth from ads and other services is slowing. The company, which last year was more than doubling the amount of money collected every quarter compared with a year earlier, reported growth of 45 percent in the first three months of 2012, and revenue declined from the preceding quarter.

And in mid-May, General Motors very publicly yanked $10 million in Facebook advertising, saying paid advertising on the site isn't effective.

Facebook is due to issue its first earnings report as a public company in mid to late July.

However, Piper Jaffray analyst Gene Munster dismissed the revenue considerations as short-term concerns for Facebook. He said there outlook for Facebook, particularly in terms of revenue from e-commerce transactions, “looks bright.”

“All this negative perspective in the near term has been well known,” he told CNBC. “The key takeaway for us is we think next year there’s going to be accelerating revenue growth” when Facebook begins to monetize commercial transactions over its platform, he said.

“When they open up their platform it will change how people buy things,” he added.

BofA Merrill Lynch said it thinks Facebook’s user monetization rate is fairly low, despite expecting the company to bring in $4.8 billion in revenue in 2012 as new advertising formats drive up revenue growth in the second half of 2012.

Facebook has introduced a string of enhancements to its advertising service over the past few weeks, including a program that allows marketers to specifically target ads to users of Facebook on mobile devices. Another improvement shows Facebook users ads based on websites that they have visited.

“The company is in the midst of a mobile usage transition and we are cautious on Facebook’s revenue trends until new mobile ad revenue models start driving the top line,” BofA Merrill Lynch’s analysts wrote.

Reuters contributed to this report.

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Shares go analysts wondering how deep Facebook

2:00 PM analysts, Facebook, Shares, wondering No Comments

Karen Bleier / AFP - AFP

An Apple iPhone shows the Facebook app splash screen on a PC screen.

Starting with its share price hit new lows daily, professional investors and market experts voice concern about the prospects for Facebook shares.

The number 1 social network share sank even lower Wednesday as nervous investors worried about the long term prospects of the company.

Facebook share decreased by 2.3 percent to a new closing low $28.19 after dropping nearly 10 percent Tuesday. The stock price, which has fallen in five of the eight days of public trade liked 26 percent now because public went to $38 per share may 17.

Facebook has seen fall the value of his stake in the company over $5 billion from the value of the IPO to $14.2 billion in current founder and CEO Mark Zuckerberg. Zuckerberg sold value of shares more than $1 billion to the IPO also according to documents filed by the companies.

The decline of Zuckerberg knocked off a short held place on Bloomberg running index 40 richest person in the world.

The offer, which was clouded by the trade in breakdowns and caused several lawsuits, already has one of the worst complete a large company, according to data Tracker Dealogic.

Anant Sundaram, a valuation expert at the Dartmouth Tuck School of business, said that he has Facebook review is concerned, because he thinks that the company difficulties his new users derive revenue, overseas and will be suspended from his growing presence on mobile devices.

About 20 percent is the current user of the company in the United States and Canada, and half of the users access the site with mobile devices, which directs Facebook of much less advertising revenue than through a desktop PC, he said. The mobile arena currently dominated Facebook rivals Google and Apple.

What's more, where Facebook at schnellsten--in Europe and Asia wachst-- markets companies less revenue. Facebook in $3 per user in the United States and Canada, but only $1.50 in Europe and Asia only 50 cent brings established Sundaram.

"You have a situation where U.S.-based PC users are for many of your revenue, but if you where the fastest, which is growing are where you make money with your user base problems accounting" Sundaram said.

Facebook's initial public offering of the company $ 100 billion geschatzt-- a number that says Sundaram 'problematic' sales by 30 to 35% annually for the next 10 years is because it would grow the company implies. Sundaram estimate that is a rating of 66 billion dollar rational for Facebook.

"This evaluation for the company that we would consider a share price, which 20 closer to the low to mid $s $40 per share," said Sundaram, which emphasises that he does not make to buy stock recommendations.

"The logic for this is I think the growth rate from 901 million users will be flat out," he said.

A course in the middle of $20 is a region where buyers and sellers of Facebook options, which began trading Tuesday for this summer are predictions.

According to the Wall Street Journal, some traders would use "put" options to set that Facebook share to $25 per share fall in mid-July.

Analysts have a wide range of price targets for Facebook's consisted of $30 to point to as high as $65, according to the newspaper.

Walter price, Portfolio Manager with RCM capital management, said CNBC Wednesday, that he thinks that the fair value for Facebook shares is about $30, added that he would buy it at this level.

He however notes that in addition to the challenge of money from mobile devices to Facebook-advertising for the majority of the revenue is dependent - it difficult can to attract and maintain large advertisers.

"Facebook is a transition in their business model," price told Reuters Insider. "It was easy to get the first 5 to 10 percent to try an advertising budget on Facebook and some brand advertising, but you have TV displace always the next 5 to 10 percent, and that is very difficult to do much."

He added "Facebook still not the metrics to prove to prove profitability and growth and awareness of their platform".

Days before Facebook's debut, General Motors announced it attracted unproven track record and concern about the lack of paid advertising on the social Web, relying on Facebook prove that advertising on Facebook is strongly back.

Facebook the next steps in the growing mobile arena can give some investors pause.

S & P Capital IQ equity analyst Scott Kessler said on Tuesday, that he has a price target of $30 for Facebook in the next 12 months relying on Facebook to acquire still emerging strategy to income in the mobile space.

S & P pointed to reports this week that searches Facebook, to both Opera buy software browser company and build a Smartphone, pointing out that a hard time making money have the company without proprietary mobile software and hardware.

"We think is not proactively at an interesting time [Facebook] more on mobile phones before their competitive positioning may affect but also aggressive affect their profitability can", Kessler said.

Reuters contributed to this report.

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