Oppenheimer Analysts Are 'Bullish' on Facebook, Reiterating Their Outperform Rating
Emmanuella Nwokenkwo & Kevin Perkins
On Tuesday, analysts at Oppenheimer reiterated their Outperform rating while raising their price target from $270 to $300 on Facebook, Inc. (NASDAQ: FB).
Backing their bullish view, the analysts noted that third-party data and their own checks point to a "stronger than anticipated recovery in FB advertising." Moreover, the analysts believe that Shops, has the potential to be a long-term catalyst.
Facebook’s global cost per thousand impressions (CPMs) were trending in the right direction as 3P data has indicated a healthy rebound back to above pre-COVID levels. Facebook is expected to have increased user engagement while generating higher revenue through Instagram, stories, and video.
“Per Gupta Media, September global FB CPMs (including core FB ads, IG and IG stories) are trending 7% above the average pre-COVID-19 rate. 3Q QTD global CPMs are -16% vs. 2Q’s -37% vs. the pre-COVID-19 average, and showing a strong recovery from March 25 low of -70% vs. the average CPM rate”, stated the analysts.
Oppenheimer analysts size the revenue opportunity for FB Shops at $25–50B. They believe long-term, Shops could further yield monetization opportunities with WhatsApp and Messenger, as CRM and payment tools could be seamlessly integrated.
Due to COVID-19, many consumers continue to increase their online shopping habits, which gives Shops the ability to capitalize on this market. As the acceleration on retail spending continues to grow, Shops can benefit long-term with the opportunity to grow the platform. Post-COVID, Shops has a massive amount of opportunities to grow as the global e-commerce market exceeds $6.5 trillion by 2023.
All things considered, Facebook has a huge potential upside in the near future. The company’s exemplary strategies of monetizing its very large and growing user base to become profitable in various ways has leveraged the company over its peers. Taking advantage of its opportunities has led Facebook to still be attractive at current levels.
Do you agree with analysts that it is time to be bullish on Facebook? Let us know in the comments on what you guys think!
Disclosure: At the time of publication, we have no positions in any of the securities mentioned in this article. We wrote this article ourselves, and it expresses our own opinions. We are not receiving compensation for creating this article (other than from TheStreet) and have no business relationship with any company whose stock is mentioned in this article.