Aegis Initiates a Buy on Facebook Inc (FB); Sees 29% Upside for the Stock


Aegis analyst Victor Anthony is out today with a positive research report on shares of Facebook Inc (NASDAQ:FB). The analyst initiated coverage on FB with a Buy rating and a price target of $150, which implies a potential upside of close to 29% from where the stock is currently trading.

“Facebook’ shares were up ~10% in 2016 but are down 13% from the high, which was set prior to 3Q16 earnings on concerns about decelerating ad revenue growth starting in mid-2017, and rising costs. On the revenue side we see user growth, advertiser demand, time spent, live video, video ads, better ad targeting, and Instagram helping to offset the lack of ad load growth. And on the expense side, Facebook has typically guided costs aggressively, only to come in below those estimates. We expect the same for 2017. The shares are cheap relative to our growth estimate (which does not include monetization of the two messaging apps). We see Facebook as the best way to continue to play the social media user time and advertising,” Anthony contends.

Looking ahead, the analyst projects that with a valuable triple threat of 600 million users, 500,000 advertisers, and 1.5 million business profiles under its belt, Instagram could bring in $1.8 billion in revenues for the year 2016, with a sharp surge to $3.6 billion for 2017. Meanwhile, with “monetization on the horizon” for Messenger as well as WhatsApp, both now past 1 billion users, and more longer-term prospective successes like Oculus, Graph Search, e-Commerce with local marketplaces, and China entry,” Anthony anticipates, “All could be meaningful within a 5-to-10 year time frame.”

As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, five-star analyst Victor Anthony is ranked #107 out of 4,345 analysts. Anthony has a 61% success rate and gains 12.4% in his yearly returns. When recommending FB, Anthony realizes 45.8% in average profits on the stock.

TipRanks analytics indicate FB as a Strong Buy. Based on 37 analysts polled by TipRanks in the last 3 months, 34 rate a Buy on FB stock while 3 remain sidelined. The 12-month average price target stands at $157.39, marking a nearly 35% upside from where the shares last closed.