Google, Twitter And LinkedIn Earnings Impressed… Facebook Is Next

• Youssef Squali of Cantor Fitzgerald commented in a note that "strong results" from Alphabet Inc (NASDAQ: GOOG), Twitter Inc (NYSE: TWTR), and LinkedIn Corp (NYSE: LNKD) "bode well" for Facebook Inc (NASDAQ: FB)
• Facebook is scheduled to report its third-quarter results on Wednesday afternoon that show its user growth and engagement "continue unabated."
• Squali maintained a Buy rating and $105 price target ahead of the print.

Youssef Squali said Facebook's print should mirror the "strong" results posted by Alphabet, Twitter and LinkedIn.

"Strong results out of Alphabet, Twitter, and LinkedIn last week showed that marketers' appetite for online advertising was very healthy throughout 3Q, boding well for Facebook as the largest recipient of non-search ad dollars online," Squali wrote.

Squali is expecting Facebook to post revenue of $4.3819 billion (36.8 percent higher versus a year ago), NEPS of $0.47, and EBITDA of $2.7306 billion (62.3 percent margin). This compares to the consensus estimate (FactSet) calling for Facebook to report revenue of $4.3679 billion, NEPS of $0.52, and EBITDA of $2.7301 billion.

Related Link: These Analysts Are Buying Facebook On Any Dip

The analyst is expecting Facebook's ad revenue to 41.2 percent year-over-year to $4.176 billion, representing a growth path that is nearly three times faster than the overall ad market, but also marking a deceleration from 43 percent in the prior quarter. The company's mobile ad revenue is expected to rise to nearly 80 percent ($3.338 billion) from 76 percent in the prior quarter and "virtually zero" in early 2012.

Squali is also estimating Facebook will show its monthly active user (MAU) base will grow 13.4 percent year-over-year to 1.531 billion and an engagement of daily active user (DAU) to MAU of 0.651 – consistent with prior quarters.

Looking past the third quarter, Squali suggested that video should "start moving the needle more meaningfully" while Instagram, WhatsApp, Messenger, and Oculus provide "upside optionality" in the medium to longer-term view.

Bottom line, Squali stated that Facebook continues to be a "top pick" given its position as "the largest/most engaging mass-reach Internet platform for advertisers, unmatched target potential, and very potent monetization formats."

Shares remain Buy rated with a $105 price target.