Analysts from Cantor and Canaccord react to social media giant Facebook Inc (NASDAQ:FB) and athletic wear giant Lululemon Athletica inc. (NASDAQ:LULU) following an official product launch and better than expected Q4 earnings, respectively. One analyst believes Facebook is well positioned in VR, predicting significant revenue growth in the next few years. Another analyst raises his price target for LULU due to strong earnings though remains neutral as he believes investors should start establishing a position in a better valuation level.

Facebook Inc

Analyst Youssef Squali of Cantor expressed his views on Facebook following the launch of its VR headset, the Oculus Rift. He states, “Facebook is positioning itself at what we believe is the epicenter of a multi-year, multi-billion dollar growth opportunity in virtual reality.” The analyst notes that although adoption of the product “could be slow initially,” he anticipates that VR will contribute to about 10% of the company’s overall revenues by 2020.

The analyst points to “shipments to more than 20 countries” upon the product’s initial launch, indicating its early success. Furthermore, “management is showing its commitment to virtual reality” by intending to expand VR into “many established industries including real estate, healthcare, and education.” Squali also notes data from accounting firm Deloitte which points to ~$1 billion market opportunity, comprising of hardware sales and content sales. In fact, in the next 3-5 years, Digital Capital believes this figure will grow to $30 billion.

While Squali notes that VR will be immaterial to Facebook’s revenues in 2016, he believes the product will account for $1.6 in revenues by 2017. He explains, “While we’re not baking VR projections in our FB estimates yet, as they start materializing, we believe they could provide upward bias to our and Street projections over time.” The analyst highlights the success of the gaming platform PlayStation 2, launched in 2000, which grew to 71 million units by 2005. Although “this is a very high watermark for VR headsets,” the potential for VR to penetrate other markets represents a catalyst for the stock.

The analyst reiterates his Buy rating on the stock with a $140 price target. In addition to VR success, he states “We remain positive on FB mainly on the strength and scale of its Facebook and Instagram platforms, and on the significant upside optionality from Messenger, WhatsApp, and VR over time.” Youssef Squali is ranked #12 out of 3,840 analysts on TipRanks. He has a 65% success rate recommending stocks with an average return of 14.7% per recommendation. Out of the 34 analysts who have rated FB in the last 3 months, 30 gave a Buy rating, 1 gave a Sell rating, and 3 remain on the sidelines. The average 12-month price target for the stock is $134.15, marking a 17% upside from current levels.Youssef Squali Consensus

Lululemon Athletica inc.

Canaccord analyst Camillo Lyon voiced his opinion on LULU after the company posted better than expected Q4:15 earnings yesterday. The company posted “solid” revenue and EPS of $704 million and $0.85, compared to consensus estimates of $693 million and the analyst’s estimates of $0.81, respectively. The results indicate that “business is getting back on track, margins are on the rebound, and product innovation is accelerating.” Additionally, the earnings beat indicates that “all aspects of the business have begun working cohesively together,” though notes that the company will reach a guidance upside in the second half of the year.  The analyst points product innovation, specifically highlighting improvements to the women’s pant wall.

Lyon mentions his previous concerns of the company shifting from air freighting to ocean freighting “have subsided meaningfully,” due to the “gross margin recapture opportunity” in Q2 and “no unexpected issues thus far.” The analyst has high hopes for the company going forward. He explains, “Beyond 2016, a forward looking, innovative/functional and coherent design vision supported by an improving operating platform should fuel sustainable long term growth and profitability.” The company plans on generating $4b in revenue by 2020 and 20% operating margin. The analyst also points to the “inventory-sales spread narrowing,” expected to level out in Q1.

The analyst reiterates a Hold rating on the stock but raises his price target to $70  from $59. Despite stellar earnings, the analyst points to some negative factors weighing on the stock such as slowing traffic, and higher gross margin pressure and a slower pace of store openings. He states, “Given the current valuation level, we will look to be opportunistic on pullbacks…”. Camillo Lyon has a 51% success rate recommending stocks with an average loss of (0.7)% per recommendation. According to TipRanks’ statistics, out of the 21 analysts who have rated the stock in the past 3 months, 15 gave a Buy rating, 3 gave a Sell rating, and 3 remain on the sidelines. The average 12-month price target for the stock is $66.06, marking a 2% downside from current levels.