Kenshoo held its 2Q17 Digital Marketing Trends webinar this afternoon, and overall the data bode well for Facebook's 2Q17 results, scheduled for today, 7/26, after the market close. Overall social spend among Kenshoo's sample increased 40% Y/Y (+18% Q/Q), consistent with its 41% rate of growth in 1Q17 and supportive of sustained topline growth for Facebook in the 2nd quarter.
Cantor is particularly impressed with triple digit percentage growth in ad spend for both social video (+157% Y/Y) and Instagram (+151% Y/Y), which comprise nearly 30% and 10% of social spend, respectively. Cantor FB model currently assumes that revenue growth decelerates to +44.7% Y/Y in 2Q17, from +49.2% Y/Y in 1Q17. Reiterate Overweight rating and $180 PT.
Cantor rates FB Overweight, predicated on 1) its position as the largest/most engaging Internet platform (~2B MAUs), offering personalized marketing at scale, 2) the substantial migration of ad dollars to social/mobile/digital video, 3) industryleading EBITDA margins, despite elevated investment, and 4) yet untapped monetization potential for Messenger (1.2+B users), WhatsApp (1.2+B users), and Oculus. FB is trading at 11.5x EV/Revenue and 18.0x EV/EBITDA on Cantor 2017 estimates, or 8.6x EV/Revenue and 13.2x EV/EBITDA on Cantor 2018 estimates, a valuation Cantor views as compelling.