The company’s shares were little changed at the start of trading Tuesday. The new target still represents 21 percent upside to Monday’s close.
The analyst noted that the company gave lower operating profit margin guidance on its second-quarter earnings call. Facebook said the margin will fall to the “mid-30s on a percentage basis” over a multiyear period due to increased security and content review expenses. It reported a second-quarter operating margin of 44 percent.
“We expect FB to also invest more in innovation areas as it looks to develop bigger long-term bets around AR/VR, and possibly payments and blockchain among other areas,” he said.
As a result, Anmuth lowered his Facebook 2019 earnings per share estimate to $7.40 from $7.89.
Despite his forecast reduction, he reiterated his overweight rating for Facebook shares due to the company’s social media market leadership.
Facebook shares are underperforming the market this year. Its stock is down 9 percent year to date through Monday versus the S&P 500’s 8 percent return.
The company did not immediately respond to a request for comment.