Facebook Shops Puts Company in 'Rarefied Air,' J.P. Morgan Note Says

Facebook had its outperform rating and $245 price target reiterated by analysts at J.P. Morgan.
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Facebook  (FB) - Get Report is in rarefied air following its introduction of Facebook Shops  this week to help small business sell their wares online, according to a bullish note from J.P. Morgan Wednesday. 

Facebook Shops allows businesses to create a single online storefront that works across both Facebook and Instagram to help facilitate greater sales. 

The move allows Facebook to have a unique combination of scale, growth and profitability, according to analyst Doug Anmuth, who maintained his overweight rating ant $245 price target on the company. 

"We believe FB Shops should help accelerate commerce progress, with revenue coming largely from more SMBs seeing higher conversion on the platform, ultimately driving incremental ad dollars," Anmuth said. 

Those ad dollars could accelerate further as more small businesses use the seamless checkout between Instagram and Facebook to even further grow their online business. 

The service currently has over 1 million small businesses on the platform out of 160 million small businesses using the Facebook family of platforms. The majority of that 160 million do not spend any money with Facebook. 

Facebook hopes to enable purchases directly within Facebook Messenger, WhatsApp and Instagram Direct Messages; add Shop features to the Instagram explore and search bars; and live connect merchant loyalty programs to Facebook apps, according to J.P. Morgan.

"Facebook is in rarefied air across the combination of scale, growth, and profitability, as the company’s massive reach and engagement continue to drive network effects, and its targeting abilities provide significant value to advertisers," Anmuth said. 

Facebook is a part of J.P. Morgan's Top Ideas and Analyst Focus lists. 

Facebook shares rose 5.9% to $229.65 Wednesday.