William Blair analyst Ralph Schackart is chiming in on Facebook Inc (NASDAQ:FB) following his meetings over the past month with an executive at a private company that purchases advertising on digital platforms, including on the social media giant, as well as a head of both social media spending as well as video ad spending from a large digital advertising agency. In reaction, the analyst reiterates an Outperform rating on shares of FB without listing a price target.
One of the biggest key takeaways Schackart underscores is the giant’s stellar standing in terms of mobile advertising, cheering, “Facebook is No. 1 mobile ad partner. Facebook’s mobile products continue to perform very well. She noted that its mobile platform continues to be No. 1 across comparable platforms, for both video and static ads.”
Where the head of the social segment of the agency anticipates her client social budget for rival Twitter Inc (NYSE:TWTR) to pull back 20% to 30%, this in turn will partially benefit Facebook, with client spending rising approximately 35% this year.
Secondly, the analyst notes, “Facebook dynamic ads (DAs) called out as a very strong ROI performer,” with clients seeing $5 return-on-ad-spend (ROAS), elaborating, “The executive said DAs’ performance is ‘crushing it.’ […] While she noted it is not quite as good as Google […] search ROI, she said the performance was beginning to be comparable and improving.”
Meanwhile, the head of social for the agency recognizes a great deal of potential in Facebook Messenger, even though the platform presently exists fundamentally for communication. Across social media and video ad spending departments, these executives are excited regarding Instagram’s robust performance, benefiting from cost-efficiency, elevated conversion rates, and strength in ROI.
Though one executive revealed pessimism on Facebook’s Facebook Audience Network (FAN) for showcasing inventory “available by default,” one direct response buyer commends its rapid expansion as well as the agency. “While Facebook does not talk much about FAN publicly, this buyer noted FAN has about 150 employees internally (which he described as a large group), and he believes it is Facebook’s fastest growing internal group. He noted FAN also applied to desktop, and his publishers have been very receptive because it is viewed as a counter to Google,” Schackart concludes.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star Ralph Schackart is ranked #475 out of 4,515 analysts. Schackart has a 69% success rate and earns 12.3% in his annual returns. When recommending FB, Schackart gains 29.0% in average profits on the stock.
TipRanks analytics exhibit FB as a Strong Buy. Out of 36 analysts polled by TipRanks, 34 are bullish on Facebook stock and 2 remain sidelined. With a return potential of 16%, the stock’s consensus target price at $160.66.