EFTA02673694.pdf

From: Ens, Amanda < Sent: Thursday, July 25, 2013 12:27 PM To: Ens, Amanda Cc: Barrett Team Subject: Facebook Beginning to Show the True Potential of Its Ad Platform; We'd Continue to Be Buyers, Increase PT to $44. Attachments: FB.pdf FB is trading up $6 at $3=.65 in the pre-market after closing at $26.51 yesterday.<=p> Facebook Beginning to Show the True Potential of I=s Ad Platform; We'd Continue to Be Buyers, PT to $44 • Facebook delivered its strongest quarter yet=as a public company—results that we think could be thesis-changing fo= many • The combination of the large 2Q earnings beat= significant increase in forecasts going forward and the fact that sentimen= was quite weak before earnings should help drive further gains in the stoc= We would continue to buy Facebook shares even=after the '17% move up in the after-market yesterday • Upside was completely driven by mobile advert=sing, which came in almost 50% higher than expected and is now 51% of FP:=17;s ad revenue (mobile becoming a tailwind instead of a headwind) * FB likely at an inflection in advertising dem=nd and ad quality, where its targeting and tracking efforts are paying off=with increased ad pricing " User engagement is steady and average time sp=nt per person on FB continues to increase Our revenue and non-GAAP EPS estimates increa=e 12% and 38% for 2013, and 22% and 46% for 2014 " Our price target moves from $35 for year-end=2013 to $44 for year-end 2014, based on the average of our DCF analysis ($4=), 15x 2015E EBITDA ($45), and 30x 2015E non-GAAP EPS ($38) We reiterate our Overweight rating on the sto=k Full research report attached Thanks, Amanda Amanda Ens I Vice President I Global Investmen= Opportunities I J.P.Morgan I NMLS ID: 853443 EFTA_R1_01951624 EFTA02673694 320 Park Ave, 14th Floor, New York, NY 10022 F: M <= href="mailto:%[email protected]"> THIS IS NOT AN OFF=CIAL CONFIRMATION For informational purposes only. This report does not represe=t an official account of the holdings, balances, or transactions made in yo=r account and is being provided at your request. Please refer to your monthly account statement for the offic=al record of all of your account activities. For question, please cal= your J.P. Morgan representative. This em=il is confidential and subject to important disclaimers and conditions incl=ding on offers for the purchase or sale of securities, accuracy and completeness of information, viruses, conf=dentiality, legal privilege, and legal entity disclaimers, available at http://www.jpmorgan.com/pages/disclosures/email <http://www.jpmorgan.com/pages/disdosures/email> . IRS Circular 230 Disclosure: JPMorgan Chase & Co. and its affiliates do not=provide tax advice. Accordingly, any=discussion of U.S. tax matters contained herein (including any attachments)=is not intended or written to be used, and cannot be used, in connection wi=h the promotion, marketing or recommendation by anyone unaffiliated with JPMorgan Chase & Co. of any of the matters=addressed herein or for the purpose of avoiding U.S. tax-related penalties.=o:p> This email is confidential and subject to important disclaimers and conditio=s including on offers for the purchase or sale of securities, accuracy and=completeness of information, viruses, confidentiality, legal privilege, and=legal entity disclaimers, available at http://www.jpmorgan.com/pages/disclo=ures/email. 2 EFTA_R1_01951625 EFTA02673695