World’s largest social network Facebook Inc (NASDAQ:FB) gave its annual F8 Developer Conference in the City National Civic Auditorium in San Jose two days ago, introducing some highly promising next moves, gearing toward Artificial Intelligence (AI) and Augmented Reality (AR). In reaction, two of Wall Street’s best performing analysts from Baird and RBC Capital are out offering bullish coverage on the stock.
Facebook never ceases to innovate its services, consistently making them a better fit to the market, which opens a door to a “virtual” field of opportunities. As such, Baird top analyst Colin Sebastian reiterates an Outperform rating on FB with a target price of $163.00, which represents an upside close to 15% from where the shares last traded.
“At the company’s annual F8 Developer Conference, Facebook announced new initiatives that we believe take advantage of the company’s advancing capabilities in AI (Artificial Intelligence) and AR (Augmented Reality). In particular, Messenger is taking a big step toward becoming an Intelligent Assistant, while Facebook is clearly putting greater emphasis on Camera functionality as well as community/group features. Overall, F8 reinforces our view that Facebook will continue to grow users and revenues through continuous improvement and product sophistication,” assures Sebastian.
Moreover, the analyst highlights the potential Facebook brings to the table in the long run, particularly as the company readies features on one of the most à la mode trends: AR/VR. “We believe Facebook is uniquely positioned to capitalize on the growing AR/VR opportunities as these devices become more accessible to consumers,” the analyst explains.
Looking ahead, Facebook will deliver its quarterly report on May 3rd. Sebastian is optimistic, concluding he “continue[s] to expect solid (in line or better) Q1 results, based on our positive intra-quarter online advertising checks, and further monetization of Instagram.”
According to TipRanks, a financial engine that measures and ranks analysts’ and bloggers’ performance, Colin Sebastian is ranked #17 out of 4559 analysts. Sebastian has a 77% success rate and generates an annual yield of 20%. When recommending FB, the analyst earns a 28.4% average profit on the stock.
Echoing Sebastian, RBC Capital top analyst Mark Mahaney likewise left the F8 Conference impressed. Therefore, the analyst reiterates an Outperform rating on FB shares, with a target price of $175.00, which represents a 23% upside from where the shares last traded.
“While much of the coverage of Zuckerberg’s keynote focused on negative competitive implications for Snapchat, we believe the more actionable implication is the potential for increased engagement among Facebook users and thus more monetization potential for FB. We believe a key ingredient for FB’s financial success these past few years has been a very high level of product and UI innovation. So we see these AR developments as a continuation or an acceleration of that innovation. Time will tell whether the new AR features are effectively rolled out in a way to materially impact engagement, but we believe the potential is definitely there,” points out Mahaney.
Additionally, the analyst underscores the industry big shark’s competitive advantage. Mahaney sees an exciting path ahead, asserting, “With Facebook Messenger and WhatsApp, FB continues to own two of the most promising and under-monetized assets on the Internet today.”
TipRanks ranks Mark Mahaney #17 out of 4559 analysts. Mahaney has a 72% success rate and makes a 17.9% yearly return. When issuing ratings on FB, the analyst generates a 34.2% average profit on the stock.
TipRanks analytics show FB as a Strong Buy. Based on 36 analysts offering recommendations for the share in the last 3 months, 34 issue a Buy and 2 maintain a Hold. The 12-month average price target stands at $163.48, making a nearly 14.91% upside from where the stock is currently trading.
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