Top Analyst Pounds the Table on Facebook Inc (FB)
Needham’s top analyst Laura Martin was out pounding the table on Facebook Inc (NASDAQ:FB) Tuesday, reiterating a Buy rating and price target of $150, which represents a potential upside of 16% from where the stock is currently trading.
The analyst gave investors today 4 reasons to buy the stock:
- Mobile – We believe digital markets have winner-take-most characteristics. Facebook is the winner in mobile with about 95% of Facebook time spent and 85% of total revs from mobile devices. Facebook today accounts for 1 out of every 5 ad dollars spent on mobile devices, and its share has been growing. Bottom line, consumers’ mobile usage is growing rapidly and Facebook’s economics mirror mobile growth, or faster.
- Reach & Engagement – Facebook reaches about 1.8B unique visitors every month and 1.18B uniques every day. Only GOOG has reach this broad. Engagement lengths are impressive at Facebook, at about 50 mins per day per user.
- Scale – Facebook’s enormous global scale gives it the ability to target very narrowly. For example, “new brides engaged over the past 24 hours” yields hundreds of thousands of ads targeted globally, even though the niche request is tiny. Facebook’s always registered real-name environment allows Facebook to guarantee advertisers unique users reached plus a cap to prevent saturation.
- Profitability – Because Facebook is a software business, marginal profits on each incremental revenue dollar are very high. EBITDA margins have been rising consistently, from 62% in 2015 to 64% in 2016.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, top analyst Laura Martin has a yearly average return of 18.5% and a 67% success rate. Martin has a 33.9% average return when recommending FB, and is ranked #56 out of 4359 analysts.
Out of the 49 analysts polled in the past 12 months, 45 rate Facebook stock a Buy, while 4 rate the stock a Hold. With a return potential of 18%, the stock’s consensus target price stands at $152.92.
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