Bob Peck Highlights Strong Positives From Facebook's Q1 And What To Expect Moving Forward

In a report published Thursday, SunTrust Robinson Humphrey analyst Bob Peck commented on Facebook Inc (NASDAQ: FB)'s first quarter results, highlighting various strengths while offering key themes to follow in the remainder of the year.

Positives From The Quarter

• U.S. and Canada average revenue per user rose 48 percent year-over-year (versus 55 percent last quarter) on a tougher comp.
• Global average revenue per user rose 37 percent year-over-year ex-foreign exchange (versus 39 percent in the fourth quarter).
• Video views per day rose to four billion (from three billion in October). This is important since frequency of video in stream helps determine video ad load.
• Facebook realized one billion daily searches.
• Over two million advertisers operate on the platform.
• Ad platform showing strong engagement.

Related Link: Facebook Q1 Earnings Conference Call: A Play-By-Play Recap

Items To Watch

• Second quarter foreign exchange impact will be greater than the 7 percent hit in the first quarter.
• High-end of spending guidance was lowered to 60 percent from 65 percent, capital expenditure remained the same at around $3 billion and the returns on these investments may take years to materialize.
• Investor expectations remain high and some may overestimate the timing of adoption and roll out of new products (i.e., Video and Instagram monetization).

Q2 Estimates

Adjusting for first quarter results, foreign exchange and Facebook's guidance, the analyst is now expecting Facebook to earn $0.46 per share on revenue of $3.9 billion. For the full fiscal year, Facebook is expected to earn $1.97 per share on revenue of $17 billion. Looking forward to fiscal 2016, Facebook is expected to earn $2.70 per share on revenue of $22.9 billion.

Shares remain Buy rated with a price target raised to $100 from a previous $90.