Why Facebook Is Worth $105 Heading Into Earnings

• Facebook Inc (NASDAQ: FB) has seen an increase of 15.64 percent in its share price over the past month, with the shares reaching a high of $104.92 on Thursday.
• Ronald V. Josey of JMP Securities has reiterated a Market Outperform rating and price target of $105 on the company.
• Josey expects the company to reports its Q3 results ahead of the estimates and the consensus, given the ramping of Instagram monetization.

Analyst Ronald Josey also mentioned that Facebook’s “video and product continues to strengthen, and overall online advertising growth is accelerating.”

For 3Q15, Josey expects the company to report 12.2 percent year-on-year growth in MAUs to 1.5 billion, with about 1 billion DAUs. Advertising revenue growth is expected to have increased 50 percent year-on-year, ex-FX, although “given the tailwinds in social, mobile, and video advertising,” Josey believes that the estimate could prove conservative.

Related Link: SunTrust's Bob Peck Expecting 'Strong' Q3 From Facebook

With Instagram have completely transitioned in September to Facebook’s ad platform and Instagram’s ads have ramped “across a variety of advertisers, and in new ad formats” during Q3.

While expecting updates on Oculus, WhatsApp and Messenger, Josey also expects the company to report EBITDA of $2.63 billion with a 48 percent year-on-year increase in cash operating expenses for the quarter.