Communication sector ETFs led the charge Thursday after Facebook (NasdaqGS: FB) posted a standout first-quarter report card that amazed many Wall Street players.
Among the better performing non-leveraged ETFs of Thursday, the Communication Services Select Sector SPDR Fund (NYSEArca: XLC) increased 1.0%, Vanguard Communication Services (NYSEArca: VOX) gained 0.7% and Fidelity MSCI Communication Services ETF (NYSEArca: FCOM) rose 0.8%.
Meanwhile, Facebook shares increased 5.9%. FB makes up 18.8% of XLC’s underlying portfolio, 15.0% of FCOM and 14.0% of VOX.
Morgan Stanley analyst Brian Nowak pointed out that Facebook’s impressive first quarter numbers came despite heavy investments in safety and security over the three months, which only served to accentuate the company’s standings, CNBC reports.
“What a start to 2019,” Nowak said in a note to clients. The strong result “speaks to the strength of its engagement, ad offering and ability to drive earnings power … even while aggressively investing to improve its platform.”
Additionally, the anticipated fine of at least $3 billion from the Federal Trade Commission over privacy violations was not enough to deter investors from the firm’s long-term outlook.
8 ETFs With Biggest Exposure to Facebook Inc (FB) via https://etfdb.com/stock/fb/.
|Ticker||ETF Name||ETFdb.com Category||Expense Ratio||Weighting|
|TAWK||Direxion Daily Communication Services Index Bull 3X Shares||Leveraged Equities||1.10%||19.21%|
|XLC||Communication Services Select Sector SPDR Fund||Large Cap Blend Equities||0.13%||18.98%|
|UCOM||ProShares UltraPro Communication Services Select Sector ETF||Leveraged Equities||0.95%||18.46%|
|XCOM||ProShares Ultra Communication Services Select Sector ETF||Leveraged Equities||0.95%||17.91%|
|VOX||Vanguard Communication Services ETF||Large Cap Blend Equities||0.10%||15.15%|
|FCOM||Fidelity MSCI Communication Services Index ETF||Large Cap Blend Equities||0.08%||15.15%|
|IXP||iShares Global Telecom ETF||Large Cap Blend Equities||0.47%||11.82%|
|SOCL||Global X Social Media Index ETF||Large Cap Blend Equities||0.65%||10.33%|
Data as of April 25, 2019
UBS analyst Eric Sheridan upgraded the company to a “buy” rating on Facebook’s sales, monthly active users base and average revenue per user that topped estimates in the quarter.
“We continue to see FB as a core large cap Internet holding for strong revenue growth at reasonable valuation multiples against 2-3 year growth,” Sheridan wrote in a note. “Based on our analysis, medium-term growth opportunities (Instagram, Video & Messenger) are under-appreciated relative to peers.”
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“While 2019 remains a year of transition, FB mgmt has now produced multiple quarters with ahead of consensus revenue/EPS performance (we believe driven by user/engagement/revenue growth on Instagram),” he added.
Citi also holds a “buy” rating for Facebook, pointing to “a combination of solid topline growth and improving expense trends to result in a 20% 3-yr revenue CAGR, stabilizing margins in 2020, and >$8 in GAAP EPS in 2020.”
For more information on the communications sector, visit our communication services category.