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.
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.
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