Morgan Stanley Bullish on Facebook Inc (FB) Amid Messenger Update Enabling Payments

Today, Facebook Inc (NASDAQ:FB) announced Messenger Platform 1.2 with several product updates, including a new ability for users in the U.S. to natively accept payments through the Messenger app. Additionally, the social media giant’s newsfeed ads will now include Messenger as a “click-through destination,” along with better mobile websites, and the ability to share content and bots with other users.

Morgan Stanley analyst Brian Nowak deems this update “an important next step in the long-term Messenger monetization opportunity,” and subsequently, reiterates an Overweight rating on shares of FB with a $160 price target, which represents just under a 26% increase from where the stock is currently trading.

The analyst predicts, “Successful in-Messenger payments and transactions roll-out is likely to be an advertising tail wind to FB. This is because on-platform transactions enable advertisers to more directly link their ad dollars to actual purchases.” This could be a key update to maximizing on both monetization as well as delving further into advertising prospects.

As Nowak points out, FB already reminds you when your spouse’s birthday or anniversary date looms in the future, and with this new update, a simple social media reminder could translate to suggestions to buy the appropriate gift from relevant businesses with just another flash of an ad in the background.

“In our view, offering native payment capability – and saving users’ payment information – is a significant next step in Facebook’s long-term Messenger monetization opportunity. This is because enabling payments directly within Messenger (and not redirecting users toward mobile websites) and saving payment information is important to reducing friction in the checkout process,” he concludes.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst Brian Nowak is ranked #366 out of 4,143 analysts. Nowak has a 66% success rate and yields 6.7% in his annual returns. When recommending FB, Nowak realizes 19.9% in average profits on the stock.

TipRanks analytics exhibit FB as a Strong Buy. Based on 36 analysts polled in the last 3 months, 31 rate a Buy on FB, while 5 maintain a Hold. The 12-month average price target stands at $156.01, marking a nearly 23% upside from where the shares last closed.


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