This week, shares of social media giant Facebook (FB) declined on the back of difficult testimony and questioning concerning social media privacy and security before the Senate Intelligence Committee. Specifically, Facebook’s Chief Operating Officer Sheryl Sandberg defended the company’s handling of its data, privacy and censorship issues in recent months.
However, the recent sell-off creates an opportunity for new buyers, says Tigress analyst Ivan Feinseth. Given the lower valuation, predicted profit growth, and market dominance, investors have a chance to buy a high-growth stock at a low valuation.
Feinseth opined, “Even as FB’s growth rates slow from the 40% and 50% levels, it continues to drive massive revenue and operating income increases as it benefits from the ongoing growth in digital advertising spend. FB continues to benefit from growing advertising revenue as it increases mobile engagement and greater advertising effectiveness on Instagram, and with embedded video ads. FB’s shift in focus from “passive consumption to encouraging meaningful interaction” will drive increased user engagement as its users increase content sharing and interaction into what CEO Mark Zuckerberg calls “higher quality” Facebook time.”
“In addition, FB will drive growth through the ongoing monetization of Instagram, Messenger, Oculus, and WhatsApp platforms along with other new products including Marketplace, Stories, and Watch. FB’s ongoing investment in increased surveillance and compliance will ultimately create a safer and more trustworthy environment that will continue to attract increasing user engagement and advertising revenue […] FB strong revenue growth continues to drive increasing Return on Capital, growing Economic Profit and greater shareholder value creation,” the analyst added.
Net net, the analyst believes significant upside exists from current levels and, as such, reiterates a Buy rating on FB shares. (To watch Feinseth’s track record, click here)
The Street definitely shares Feinseth’s upbeat take on Facebook. This “Strong Buy” stock has received 31 recent bullish calls from the Street vs 5 Hold and 2 Sell ratings. Given FB is currently trading at $162.66, the average analyst price target indicates nearly 27% upside potential.