In a research report issued today, Cantor analyst Youssef Squali provided commentary and analysis on Facebook Inc (NASDAQ:FB), following a string of positive announcements, including the wide launch of Instagram ads, a Pages update aimed at SMBs looking for a mobile presence, and WhatsApp recently crossing the 900M MAU mark. Additionally, the analyst reiterated coverage of Facebook with a Buy rating and price target of $105.
Squali wrote, “We’ve consistently highlighted untapped monetization potential from Instagram, Messenger and WhatsApp as catalysts for the stock over the intermediate term, and that intermediate term appears to be taking shape now, at least for Instagram. FB remains our top pick in the Internet space based on 1) FB’s position as the largest/most-engaging Internet platform, 2) the on-going shift of ad dollars to mobile/social, and 3) a massive video opportunity.”
The analyst believes that the Instagram ads business should generate over $1B over the next 12 months, while more meaningful revenue contribution is expected in 2016. According to Squali, Instagram is leveraging new ad formats to improve upon the opportunity, which is incrementally positive for Facebook’s ad revenue over the next 12 months.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Youssef Squali has a total average return of 14.7% and a 55.7% success rate. Squali has a 46.8% average return when recommending FB, and is ranked #54 out of 3752 analysts.
Out of the 46 analysts polled by TipRanks, 41 rate Facebook stock a Buy, 4 rate the stock a Hold and 1 recommends Sell. With a return potential of 21.6%, the stock’s consensus target price stands at $110.