Research analyst at Bernstein, Carlos Kirjner upgraded his rating for Facebook Inc(NASDAQ:FB) from Market Perform to Outperform. The new price target is $33, up from $24.
Kirjner believes that the Street is being too dogmatic with its predictions for top-line growth for the upcoming years.
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He wrote that Bernstein feels consensus is undervaluing Facebook’s revenue growth power over the coming 12-24 months. Kirjner predicts 2013 revenue of $6.976 billion and 2014 revenue of $8.650 billion.
Kirjner feels the driving force for the strong outcomes will undergo improved monetization of the Facebook newsfeed on mobile handsets.
He has written that Facebook is likely to increase the number of ad impressions for each user for each day with restrictions on chance of seeing material deterioration in user experience. The company believes that at the moment, the revenue growth trajectory of the social networking site will be the main driver of its stock performance.
Kirjner has a feeling that the successful monetization of Newsfeed inventory and launch of the Facebook Exchange have given the social networking site an 18-24 month runway to plan new revenue streams from new formats, to work with advertising agencies and third parties to enhance advertising Return on Investment and its calculation that would improve its long-term pricing. Kirjner thinks of Facebook as a unique display advertising business, however, mobile and Facebook Exchange make it better and larger. It also extends the time horizon that Facebook has to realize the potential of new business opportunities and of social advertising.
Kirjner concluded by mentioning that with the stock trading at $24, there is more upside than downside over the next 12 months, provided that conservative estimations on revenue trajectory indicate a revenue pound and also considering the advantageous potential from idiosyncratic assets of Facebook.
Share of popped up by 8.26% to $25.98 on hefty volume, well above its 200-Day Moving Average of $24.21.