Jefferies Cuts Facebook Price Target Ahead of Earnings

FB hasn't traded north of $200 since before a late-July post-earnings bear gap

Oct 23, 2018 at 10:15 AM
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Jefferies cut its price target on Facebook, Inc. (NASDAQ:FB) to $200, though the brokerage firm reiterated its "buy" rating on the FAANG stock. This relatively bearish analyst note comes ahead of Facebook's earnings report, due after the close next Tuesday, Oct. 30, and -- alongside stiff broad-market headwinds -- has FB shares trading down 1.6% this morning at $152.36.

Looking closer at the charts, the last time FB stock saw the north side of $200 was July 25, which is also when it hit a record high of $218.62. The next day, though, the security slumped 19% on a negative reaction to Facebook's profit margin warning. The shares have continued to trend lower, and are closing in on their March 26 annual low of $149.02.

Nevertheless, most analysts are still bullish on FB, with 28 of the 33 in coverage maintaining a "buy" or better rating -- and not a single "sell" on the books. Plus, the average 12-month price target of $207.58 stands at a 36% premium to current trading levels. This puts the struggling FAANG stock at risk of more bearish brokerage notes, which could send it even lower.

Elsewhere on Wall Street, skepticism toward FB stock has been ramping up. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 0.70 ranks in the 88th annual percentile, meaning puts have been bought to open relative to calls at a quicker-than-usual clip.

Plus, short interest edged up 5.4% in the two most recent reporting periods to 26.65 million shares, though these shorted shares account for a low 1.1% of Facebook's available float. The stock could be pressured even lower, should bearish traders continue to increase their exposure to FB.


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