Brean Capital analyst Sarah Hindlian weighed in with a favorable report on Facebook Inc (NASDAQ:FB) following a deep dive on the company’s early stages of monetization of its Owned & Operated mobile applications, such as Instagram, WhatsApp, and Messenger. The analyst reiterated a Buy rating on the stock, and raised the price target from $100 to $108, which implies an upside of 33.2% from current levels.
Hindlian noted, “Instagram’s recent decision to open its platform to a broader set of advertisers and provide better targeting tools will come in the form of a slow and steady ramp starting in late FY’15 and expanding in FY’16 to both Branded and Direct Response advertisers.”
The analyst also observed “We believe the co. is building a “network effect” [with Whatsapp] and seeking to have substantial user scale before enforcing fee based monetization. We therefore do NOT include WhatsApp in our model, but offer several potential user-fee driven monetization analyses.”
Furthermore, “We look at potential Messenger monetization following early product announcements from F8 in the spring, by comparing Messenger to successful Korean app LINE, given product announcement overlap. We then provide an ARPU driven scenario analysis to Messenger to show how Facebook could begin to ramp Messenger similarly to LINE.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Sarah Hindlian has a total average return of 2.1% and a 58.3% success rate. Hindlian has a -1.3% average return when recommending FB, and is ranked #2153 out of 3629 analysts.
Out of the 47 analysts polled by TipRanks, 43 rate Facebook stock a Buy, 3 rate the stock a Hold, whereas only 1 recommends a Sell. With a return potential of 19.02%, the stock’s consensus target price stands at $96.48.