Facebook Inc (NASDAQ:FB) Trying To Bounce Back On Analyst Note
Shares of Facebook Inc (NASDAQ:FB) ended higher by 3.64% to $26.81 on Wednesday with most of the buying came in the final hour of the trading session.
Analyst at JMP Securities initiated coverage on the stock with a Market Outperform rating and has price target of $37 a share.
The firm sees profits of 52 cents a share this year and 68 cents in 2013. He notes that the stock is trading at about 40x his 2013 profit forecast, with a negligible contribution from mobile ad revenue. While they concede that the valuation looks statistically high, Facebook has “plenty of opportunities to monetize its vast user base.”
Harding says that even his worst-cast discounted cash flow analysis suggests the company is worth $27 a share – but he contends that more bearish view “understates the company’s ability to further monetize its user base.”
Also, Nasdaq OMX Group said that it is ready to reimburse investors to the extent of $40 million affected by technical glitches occurred on the debut day of the Facebook’s IPO. However, the agreed amount is well short of actual the losses disclosed by top market participants. There are estimated $115 million of losses booked by the top four market makers including UBS, Citigroup, Knight Capital, and Citadel Securities.
After approval by regulators, $13.7 million would be paid to its affected member firms and the balance would be credited to members to reduce trading costs, with all benefits expected to be awarded within six months, Nasdaq said.
Nasdaq said the technical problems that hindered traders during Facebook’s May 18 IPO have been remedied. Nasdaq also said it had hired IBM (IBM) “to conduct a thorough review of the current state of processes for designing, developing, testing, deploying and operating market systems,” the stock exchange said in a release.