Facebook Inc (NASDAQ: FB) is the best stock idea of the year according to JPMorgan Chase & Co. (NYSE: JPM). In a report published on Thursday May 14th the investment bank, represented by analyst Doug Anmuth, said that Facebook was worth a price target of $100 and is the company’s favorite idea for investors right now.
Mr. Anmuth said that Facebook strength lay in the company’s strong 1.4 billion user base, its ability to build other “strong franchises,” represented by Instagram, WhatsApp and Messenger, and its “impressive engagement” with its users. Today is Mark Zuckerberg’s birthday and his company is surging upward in the stock market. The firm’s shares were trading up by nearly 4% at time of writing to $81.37. Not a bad birthday gift.
Facebook engages users
19% of the total time spent on the internet was used across Facebook services according to a comScore report. Meanwhile engagement on Facebook itself was much stronger than engagement on other social networks. The company’s main app held users attention for 24% of total smartphone minutes in April.
That, according to Mr. Anmuth, is double the total minutes of all of the other social services combined. Those other social apps include Messenger, Instagram and WhatsApp which are directly owned by Facebook.
If everything is included about 35% of the time that users spend on their smartphones is spent looking at Facebook services.
That means that the Menlo Park company has almost as much, if not more, of a claim on the attention of Android users as Google Inc (NASDAQ: GOOG), the firm that has spent billions creating, operating and promoting the mobile operating system.
As for the fate of iOS users of the social network’s all-encompassing social web, Apple Inc. (NASDAQ: AAPL) doesn’t mind all that much was users do on their iPhone as long as they keep buying the hardware.
Facebook demands a high price
The $100 price target put on the shares by Mr. Anmuth represents a 25% bump over today’s highs. Facebook shares have not gone above $84 in open trading, and that level was achieved just weeks ago in March. Mr Anmuth reckons that the company’s strong product evolution will help the firm’s improvement going ahead. Instant Articles and video calling in Messenger got a special mention in the report.
Meanwhile a piece of research from Benjamin Swinburne and Brian Nowak at competing investment bank Morgan Stanley (NYSE:MS) had even more good news for Facebook investors. The company is, according to those analysts, about to pass out Google in its ability to capture incremental ad dollars.
Incremental advertising dollars refers to each additional dollar spent from here on out. If the industry growth by 10% Facebook is likely to get more than Google.
As Mr. Zuckerberg turns just 31 and analysts celebrate the wise decision making that brought the company to its current state of exuberance, it’s likely time to reflect on all of the analysts that questioned his age when the company went public almost three years ago. That, another anniversary for the company to mark, will take place over the coming weekend.