Facebook is 'one of the more controversial stocks' right now. Here's what the experts on Wall Street are saying ahead of earnings.

Mark ZuckerbergMark Zuckerberg.Stephen Lam/Reuters

  • Facebook is set to release quarterly earnings after the closing bell on Wednesday.
  • The stock is expected to see post-earnings move that's essentially in-line with its 6.9% average.
  • Shares of the social network have climbed nearly 8% this year, but have fallen 34% since their record high last July as the company's privacy and data practices have come under scrutiny.
  • Watch Facebook trade live here.

Facebook is set to release fourth-quarter earnings after Wednesday's closing bell, and some Wall Street analysts were approaching the report with a cautious tone after months of volatility in the stock.

"We think Facebook is one of the more controversial stocks in our coverage (unsurprisingly), with bulls pointing to easy comps in the back half and potential for opex growth to be revised lower throughout the year, and bears noting third-party data/checks are mixed to negative," Instinet analyst Mark Kelley said.

He carries one of the lower price-targets on Facebook. His $148 target implies a 3% gain from current levels, and he recently told clients that he's come out "more on the cautious side to start the year."

Meanwhile, Credit Suisse's Stephen Ju trimmed his price-target by $2 per share to $208 - but that was still 44% above where shares settled Tuesday. He also cut his 2018 adjusted earnings per share by a penny to $8.65.

Susquehanna's Shyim Patel, who carries an even more bullish view, told clients in a Monday note that Facebook "deserves a premium valuation." He has a $220 price-target on the name, and has pointed specifically to Facebook's dominance in the advertising space as a reason to own the stock.

Patel also noted he believes concerns around potential regulation and issues surrounding its "Stories" feature are "already baked into the stock."

The options market is implying a one-day move of around 7.4%. That's barely higher than the absolute price move of 6.9% on earnings days since the company's first quarterly announcement in July, 2012, according to an Instinet analysis of Bloomberg data.

Still, quarterly results have historically proven to be meaningful catalysts for the stock. Facebook's best and worst one-day performances have both come post-earnings announcements, according to Frank Cappelleri, Instinet's chief market technician and senior equity sales trader. The stock's best day was on July 25, 2013, with a 29.6% gain, and its worst day was last July, with a nearly 19% loss.

"While moving averages don't always work well as support and resistance, FB's 50 Day Moving Average has been a useful reference point the last few months," Cappelleri wrote to Business Insider in an email. "It now represents a support line near 40, a level that could be in the cross-hairs once again post numbers."

Read more: Facebook's massive engineering overhaul will have a wide-reaching impact that goes far beyond how its apps are used

Facebook's stock has plunged 34% since setting a record high of $218.62 last July, when the social network said on its quarterly earnings call that it expected significantly lower sales growth rates and operating margins in the years ahead as it focused on privacy issues. The company has come under intense public and regulatory scrutiny over the last year as privacy and data scandals have come to the fore.

Wall Street is still quite optimistic on Facebook, with 77% of analysts surveyed by Bloomberg carrying a "buy" rating.

Facebook is expected to report earnings of $2.18 a share on revenue of $16.4 billion, according to analysts surveyed by Bloomberg.

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Facebook shares.Facebook shares.Markets Insider

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