Analysts are positive on social media giant Facebook Inc (NASDAQ:FB) and Google’s parent company Alphabet Inc (NASDAQ:GOOGL), as Facebook’s Oculus Rift began delivering Oculus Rift virtual reality headsets today, and Google’s much-awaited conference, GCP Next, ended on 24th March in San Francisco.
In a research report issued today, Piper Jaffray’s top analyst Gene Munster reiterated an Overweight rating on shares of Facebook, with a price target of $170, following the news that Facebook’s virtual reality division Oculus has begun to ship the Oculus Rift virtual reality headsets in more than 20 countries.
Munster commented, “We continue to see 2016 as a warm up year for VR and believe that the most important thing for 2016 is the development of compelling VR content. While immaterial to our model, we expect about ~500k Oculus Rift units in 2016, which would represent about 1% of our overall Facebook revenue in 2016. More notably, we believe the availability of Oculus Rift should mark an inflection in investor optimism on the VR theme with real consumer products now in the market. We expect minimal financial impact from Oculus over the next couple of years (see page 2), but believe Facebook’s role in VR should be a positive to FB’s multiple over the next year.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Gene Munster has a yearly average return of 18% and a 62% success rate. Munster has a 41% average return when recommending FB, and is ranked #4 out of 3742 analysts.
Out of the 47 analysts polled by TipRanks, 42 are bullish on Facebook stock a Buy, 4 are neutral, and 1 is bearish. With a return potential of 14%, the stock’s consensus target price stands at $129.76.
UBS analyst Eric Sheridan reiterated a Buy rating on shares of Alphabet, with a price target of $875, following the Google Cloud Products (GCP) Next 2016 conference in San Francisco, where some interesting features and plans for cloud were revealed.
Sheridan wrote, “At GCP NEXT, Google provided a fresh glimpse into its cloud computing ambitions, affirming our view that Google will emerge among the top players in this space over time. In particular, Alphabet Chairman Eric Schmidt laid out a broad vision for the future of application development – from “writing” programs to “teaching” programs – which we expect will be the guiding principle behind the long-term evolution of the platform.”
“Shorter term, we note the following overarching themes: 1) better understanding customer needs: while Google has long used PaaS/NoOps infrastructure itself, customers have not – Google demonstrated an interest in meeting customers “where they are”, addressing a longstanding criticism around its strategy; 2) machine learning: Google will make machine learning a focal point of GCP – a differentiating feature set in our view; 3) go-to-market: while GCP’s price, performance, security & innovation are all strong selling points, Google is investing in its partner ecosystem & hybrid/multi-cloud tools to drive adoption – this should help close the gap vs. peers,” the analyst said.
Out of the 46 analysts polled by TipRanks, 43 rate Alphabet stock a Buy, while 3 rate the stock a Hold. With a return potential of 20%, the stock’s consensus target price stands at $906.17.