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Mark Zuckerberg testifies before the House Energy and Commerce Committee in the Rayburn House Office Building on Capitol Hill April 11, 2018.
Facebook shares will disappoint as governments increasingly scrutinize the company’s practices, according to MoffettNathanson.
The firm lowered its rating to neutral from buy for Facebook shares, predicting the internet company will generate earnings below expectations this year.
“We believe that revenue growth deceleration coupled with the company’s long-term margin guidance does not provide a meaningful near-term path for outperformance,” analyst Michael Nathanson said in a note to clients Tuesday. “Facebook is increasingly under the eye of global politicians and regulators, which will force the company to become more aggressive on spending to show contrition … The deceleration in growth, coupled with continued regulatory scrutiny, is a toxic brew for any stock.”
Facebook shares are down 0.7 percent in Tuesday’s premarket session.
Nathanson lowered his price target for Facebook shares to $175 from $200. The stock closed at $175.73 Friday.
Nathanson and the other co-founder of his firm, Craig Moffett, are widely-watched analysts in the media and telecom space.
Facebook did not immediately respond to a request for comment.