Following up on "Facebook: Research Deluge Ahead; Quiet Period Ends Wed. (FB)" the Journal does a deeper dive.
From the Wall Street Journal:
Facebook Analysts to Click 'Like'—or Not
Facebook Inc. is likely to get a bunch of new friends on Wall Street on Wednesday, when about two dozen analysts will be free to chime in publicly on its prospects.
On Tuesday, a 40-day quiet period will conclude for analysts at banks that were underwriters of Facebook's initial public offering, including lead underwriters Morgan Stanley, J.P. Morgan Chase & Co. and Goldman Sachs Group Inc. The analysts are expected to publish their initial research early on Wednesday, people at the firms said.
Major Wall Street firms are barred for a period from putting out analyst reports on stocks they underwrite partly to keep a lid on hype that can surround hot IPOs. Other smaller banks involved in an IPO typically agree to adhere to the delay.
When reports do come out, they can provide a booster shot for shares. The day the analyst reports from underwriters came out for LinkedIn Corp. last year, LinkedIn shares surged 12% as the Standard & Poor's 500-stock index rose 1.3%.
For nearly 700 U.S.-listed company IPOs from 2006 to 2011, analysts initiating research after 40 days placed an average "hold" or "buy" rating on the stock, according to Ipreo Inc., a research from capital markets data and advisory firm. Of seven IPOs that had initial average analyst ratings of "sell," the companies' shares had rallied sharply after the IPO, which analysts said made the stocks overvalued, Ipreo said.
Analysts not affiliated with the Facebook IPO have pointed to a series of developments since the social-networking company's market debut that could help support a positive outlook. In early June, Facebook announced it was expanding advertising opportunities on its mobile app, a move expected to boost revenue. Also this month, some big-name advertisers said they found value in Facebook advertising. Facebook also said it began placing messages from advertisers on game site Zynga Inc....MORE