Analysts have mixed view on Facebook
The mandatory 40-day quiet period has expired on the Facebook IPO, and sell-side stock analysts--those who work for underwriters of the offering and others--have weighed in with largely bullish and neutral views.
But even so, the reports were quite sober and there were no wild predictions of Google-like early stock gains. There was even a sell recommendation. Reuters report that "of 17 brokerages that issued research reports, only eight recommended that investors buy Facebook shares, eight brokerages gave neutral ratings and one had a 'sell rating.'"
Among the most bullish: Morgan Stanley, which controversially served as the lead underwriter and exerted enormous influence over all decisions. The top banker said ahead of the offering that if anything went wrong it would be his neck on the line. The bank judges the stock a buy candidate, and thinks that the price will get back to the offer price fairly soon. Other banks that slapped an "overweight" call on the stock include other top underwriters, notably Goldman Sachs and JPMorgan Chase.
So who was the lone wolf crying sell?
BMO Capital Markets' Daniel Salmon initiated coverage with "underperform" recommendation and a $25 target, a nearly 25 percent discount from current levels. He told Reuters, "Slowing user growth is one of our primary concerns for Facebook's current valuation."
He estimated Facebook's customer growth would be 22 percent next year and 16 percent the year after, much slower than expansion in the past.
So who is right? We'll just have to see. This is one of those stock on which analysts can really make a name for themselves, if they're right.
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