Updated from 9:30 a.m. EST to provide additional analyst comments in the fourth paragraph and comments on Facebook Home in the tenth paragraph.

NEW YORK ( TheStreet) -- Facebook ( FB - Get Report) has had a rough go of it in 2013, with shares falling more than 12% year to date, while the markets have rallied. That's caused two analysts to upgrade the stock, despite the weak sentiment surrounding the stock.

BMO Capital Markets analyst Daniel Salmon upgraded shares to "outperform," raising his price target to $33 based on the fact that ad agency and ad tech contacts have been quite positive on Facebook, despite the recent weakness in market sentiment, largely over the migration of younger users to other social networks, including Twitter, Tumblr, and Instagram, which Facebook owns.

While Salmon does agree that the risk of younger users leaving is troubling, he believes "the Street is underestimating the 'portfolio of social networks' strategy that is emerging to address this over the long term," he wrote in his note.

Salmon doesn't see Facebook as just one social network, but rather it has a variety of ways for users to engage and interact on the platform. Not only does it own Instagram, but it has a slew of mobile apps, something Salmon calls "fundamentally niche mini-social networks." These include the Messenger, Camera, and Poke apps, as well as Facebook and Instagram. "We see these offerings not as an attempt to create the next blockbuster platform, but rather as specialized offerings for users focused on particular activities as opposed to the 'social utility' that is offered by Facebook," Salmon wrote in the note.

He also believes that Facebook will start monetizing video advertising better, and the potential for Facebook Gifts in the holiday season, as well as the eventual monetization of Instagram, are being largely ignored by the markets right now.

Salmon raised his earnings estimates for the fourth quarter of 2013, as well as 2014 in light of this. He now expects Facebook to earn 20 cents a share on $2 billion in revenue in the fourth quarter, up from 19 cents and $1.965 billion in sales. For fiscal 2014, he expects Facebook to earn 80 cents a share on $8.256 billion in revenue, compared to a previous forecast of 76 cents a share on $8.074 billion in revenue.

Jefferies analyst Brian Pitz is taking largely the same approach in his upgrade, as he raises the stock to "buy" and raises his price target to $32 from $31.

Pitz upped his second quarter and 2013 full-year estimates on the Menlo Park, Calif.-based social networking giant. He now expects Facebook to earn 9 cents a share on $1.62 billion in revenue for the second quarter, up from 7 cents and $1.6 billion previously. Full-year estimates were taken to 37 cents a share on $6.754 billion in sales, up from 31 cents and $6.63 billion in revenue.

With the recent concerns over user migration, advertisers suspending campaigns because their ads appeared next to offensive content (something Facebook addressed recently), as well as the criticism of Facebook Home, Pitz noted that the recent selling pressure may be overdone. "We think concerns over declining engagement, particularly among the younger demo, have created a buying opportunity," Pitz wrote in his note. "We note user engagement in 1Q was at the highest levels ever, with 6 of 10 users logging in on a daily basis."

Facebook's COO Sheryl Sandberg touched on Facebook Home at the D11 conference, saying what users see now is "a very early version" of what the product will ultimately be. "I think it will be a long road, but I really think we're on a path to making phones more social," Sandberg said at the conference.

There's been concern that Facebook, which already has over 1 billion users, will succumb to the law of large numbers in terms of user growth, and if it can't effectively monetize those users, then revenue growth will go the way of user growth. Pitz, however, doesn't see it that way. He believes "there is room for financial upside as we expect marketers will find Facebook's 1B+ users irresistible despite any incremental changes in teen usage habits."

-- Written by Chris Ciaccia in New York

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