Wednesday, January 23, 2013

Face Book the right script to fit into your portfolio? - Complete Report

Face Book has found itself in a very difficult position in placing its script in the Wall Street following its failure at its initial public offering. Security analysts at the investment banks have never wavered in their enthusiasm right from the beginning.

facebook stock

Reason for the downgrade of FB IPO :
Major underwriters of Face Book like Morgan Stanley, J.P.Morgan and Goldman Sachs Group failed to figure out the price and remained with Buy recommendations even as in house mutual funds sold some of their Facebook holding initially. Massachusetts Secretary of Commonwealth William Galvin alleged that Morgan Stanley technology banker’s circumvented rules when they advised Facebook finance officials how to lower revenue estimates just before Facebook went public. MS didn't admit or deny the allegations.
“The system is being gamed by the financial- service industry “a strong message to avoid such sort of conduct says experts.

IPO (Considered overweight rating) :
Morgan Stanley- Price Target $38 , J.P. Morgan & Goldman Sachs- Price Target $42.
Continued with sale of its major holding by underwriters within few months of listing, created a panic and thereby finding a point at which the script found its price to float between 25 to 30$.
FB is a Healthy Investment says experts Research Analyst offering a higher number off “HOLD” rating for the companies share than “BUY
A “Hold” rating probably suggests the company is fairly valued at current price and the investor should hang on to share if they already own. Analyst looks into uncertainty with Facebook revenue-generation business model and the tough market condition may be the contributing factor behind such call.
Still the major player like J.P. Morgan and Goldman Sacs are bullish with Facebook share price target expecting the range between $42- $45 over 18 months.
"We believe Facebook's virtual ownership of the social graph, strong competitive moat, and unwavering focus on the user experience position the company to significantly improve monetization over time and to become an enduring, blue-chip company built for the long term," J.P. Morgan's Doug Anmuth.
Facebook, Inc (FB)
Closing at $30.73 at Nasdaq as on Jan 22, 2013.
Recommendation Trends
Strong Buy 30%, Buy 40% and Hold 30% as per current month is concern by analyst around the world.

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