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Facebook, Alphabet Price Targets Up on E-Commerce Ad Potential

E-commerce ads will boost revenue for Facebook and Google, says UBS analyst Eric Sheridan, who raised his price targets.
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Facebook  (FB) - Get Meta Platforms Inc. Class A Report and Alphabet  (GOOGL) - Get Alphabet Inc. Class A Report received higher share-price targets from UBS analyst Eric Sheridan, who is optimistic about the potential for e-commerce ads.

Sheridan lifted his target for Menlo Park, Calif., social-media giant Facebook to $330, topping Wall Street estimates, according to Bloomberg. The target was previously $242.

The analyst affirmed his buy rating on enthusiasm about the company’s exposure to e-commerce, The Fly reports.

Sheridan boosted his Alphabet target to $1,970 from $1,600, again maintaining a buy rating. With the Mountain View, Calif., tech and advertising giant, too, he’s impressed with the connection of its ad business to e-commerce, Bloomberg reports.

As for Facebook, its rising exposure to e-commerce will boost revenue, Sheridan wrote in a commentary, according to The Fly. 

About 99% of Facebook’s sales come from ads. The rise of social commerce and its contribution to "highly effective" advertising outcomes also is a plus, he said.

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When it comes to Alphabet, “the underlying rate of recovery [in the digital advertising market] is being underestimated by the market,” Sheridan wrote in a commentary, according to Bloomberg. 

Advertising is “increasingly levered to sustained e-commerce trends,” he said.

Ad sales account for 80% to 85% of revenue at Alphabet.

The growth of Google Cloud also should push revenue higher and profit margins wider, Sheridan said, according to The Fly.

The "upside optionality" of Google's e-commerce and Local/Maps offering is another positive factor, he said.

Facebook shares recently traded at $272.65, up 0.5%. The stock had jumped 32% so far this year through Monday. 

Alphabet shares were 0.4% higher at $1,591.07. The stock climbed 18% year to date through Monday.