Facebook and Wall Street Are in 'Like'

NEW YORK ( TheStreet) -- For the longest time, Facebook ( FB) could do no right by Wall Street's standards. Then the company posted second-quarter earnings that reshaped analysts' thinking, and now analysts can't get enough of the social networking giant.

Oppenheimer raised its price target on Facebook to $54 from $36, citing video ads, the Facebook Exchange launch into mobile, increased payments activity and paid search ads. Analyst Jason Helfstein, who maintained his "outperform" rating, said that Instagram was worth $4 a share, the first time I've seen anyone apply a numerical value to Instagram.

Helfstein noted that Oppenheimer's analysis "suggests $4-23/share of potential value from video ads. Our model still conservatively assumes a 41%/63% monetization gap vs. Yahoo/AOL."

In addition to the price target raise at Oppenheimer, Canaccord Genuity initiated coverage on the Menlo Park, Calif.-based Facebook, noting that the company in the "early stages of monetization of its user base."

Analyst Michael Graham initiated coverage with a "buy" rating and a $60 price target, as he believes the company could generate significantly more revenue than it already does from its user base of 1.15 billion.

"While the path higher may not be linear, we expect Facebook's reach, robust network effects, vast self-disclosed user data, and product innovation will increasingly make it a high-priority target destination formany marketers," Graham penned in a research note.

Facebook is working on expanding its user base globally, with CEO Mark Zuckerberg having recently announced a new initiative to get the next 5 billion connected to the Internet, via Internet.org.

As Facebook's user base becomes more accustomed to using its services on mobile devices (Facebook had 819 mobile monthly active users as of the end of the second quarter), Graham said he believes that generating revenue from mobile is vital.

"We believe that Q2/13 was a turning point in the company's mobile monetization. While some categories of mobile ad spend may be volatile (app downloads), we believe Facebook's sponsored stories product is at last compelling brand advertisers to commit more spend to mobile," the analyst said.

Facebook generated 41% of its $1.6 billion in advertising revenue during the second quarter, up 61% from a year earlier. For the entire quarter, Facebook had $1.813 billion in revenue.

With the long-awaited video ad products and pending Instagram monetization coming shortly, according to Graham, Facebook is still in the early stages of generating massive amounts of revenue from its users. Rumors are that Facebook could charge as much as $2.5 million per video ad to advertisers, similar to what is charged for a 30-second spot during the Super Bowl.

Shares of Facebook were higher in premarket trading Wednesday, up 1.7% to $49.25.

-- Written by Chris Ciaccia in New York

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