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Facebook Inc (FB) Top Pick For Cantor Fitzgerald

Facebook Inc NASDAQ:FB

Facebook Inc (NASDAQ:FB) shares were up yesterday after a raise in the price target to $100 from $92 by Youssef Squali at Cantor Fitzgerald. Squali, who gave a Buy to the stock, noted that the firm is poised well to benefit from the rise in the spending on the internet ads.

Facebook Inc NASDAQ:FB

To benefit from rising ad spend

Squali named Facebook as their top pick owing to a number of reasons such “its position as the largest/most engaging mass-reach Internet platform for advertisers, offering personalized marketing at scale,” and its impressive valuation. Also, Instagram, Messenger, WhatsApp and Oculus, which are all owned by Facebook, present a “compelling prospects,” said Squali.

Internet ad spent is expected to overtake TV by 2020 with mobile being the leading contributor says the report. And owing to Facebook’s dominating position in the mobile and massive size, the firm will benefit largely from the “ad budgets shift,” notes Squali.

Also, the analyst believe that the firm’s new ad formats will attract more clients. Cantor analyst cited the firm’s recent update, where the users will get a 360-degree view of a product. In addition, the analyst notes that video usage is growing on the platform, and video ads will follow soon.

“As video wins more auctions (advertisers should be willing to bid more for video ads), we expect to see upside to ad revenue,” said Squali.

Instagram vital for Facebook

Cantor believes that Instagram will add $2.5bn to the social network’s top line in fiscal 2015 while WhatsApp, Messenger and Oculus will start contributing soon.

Also, Merrill Lynch gave a Buy to Facebook, and raised the price target from $95 to $105, noting the stock to be their top pick backed by rising mobile exposure, better ad targeting, Instagram and other platforms. The analysts are very impressed with Instagram monetization as the photo sharing app gained 300m MAUs with 70m photos shared on a daily basis getting 2.5bn likes each day. On an average users spend 20 min on the photo app.

Wall Street is widely bullish on the Facebook, according to Bloomberg 46 analyst rate it a Buy while six consider it a Hold and only one believe it to be Sell. Piper Jaffray has the highest price target on the social networker at $120 while the 12-month consensus price target on the stock is $97.71. On Wednesday, Facebook shares closed up 1.34% at $86.91, and year to date, the stock is up almost 10% while in the last 12-months the stock is up almost 30%.

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Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.

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