Facebook Is Bank Of America's 'Top Idea' In Media

Justin Post of Bank of America maintained a Buy rating on Facebook Inc (NASDAQ: FB)'s stock ahead of Wednesday's Q2 earnings report.

While Facebook's growth trends likely moderated "somewhat" in the quarter on tougher comps, the company could still post upside results to current estimates.

The consensus estimate is calling for Facebook to earn $0.82 per share on revenue of $6.01 billion. Post is modeling the company to earn $0.85 per share on revenue of $6.05 billion.

Post said Instagram likely experienced "robust" growth trends in the quarter and new ad formats on the picture and video sharing social media platform could sustain its momentum moving forward.

Related Link: Here's Why Facebook Remains A 'Must-Own Stock'

Meanwhile, operating expenditure controls serve as another earnings per share lever, but Post isn't expecting Facebook's management team to trim its 2016 opex growth forecast. On the other hand, the U.S. dollar strengthened since April and this may prove to be a "slightly bigger" headwind in the second half of the year.

Looking past the current quarter, Post maintained a bullish view on Facebook, given:

• 1) A $5 billion-plus opportunity to Monetize Instagram
• 2) Improving and sustainable user engagement with Facebook's video and Live features
• 3) New ad formats like canvas
• 4) Potential for opex rationalization
• 5) The potential to collect new streams of revenue from WhatsApp and Messenger.

Bottom line, Facebook's stock is trading at 25x Post's 2017 earnings per share expectations, which is "more attractive" than its social media peers.

Shares remain Buy rated with an unchanged $145 price target and is also a "top idea" in the media sector.