Facebook Inc (NASDAQ:FB) reported better than expected second quarter earnings yesterday. Susquehanna Financial Group raised its price target for the social networking giant after the company’s Q2 revenues of $1.8 billion beat SFG’s estimate by 11% and the consensus estimate by 12%. SFG analysts Brian Nowak and Michael Constantini said in a research note that the beat was primarily due to higher than expected ad revenues across all geographic regions.

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Facebook monetizing mobile user base

Facebook Inc (NASDAQ:FB)’s non-GAAP earnings before income tax of $794 million was 33% higher than the Wall Street consensus and 29% above SFG estimates. Earnings per share of 19 cents was also 5 cents above the SFG and Wall Street estimates. Susquehanna said that second quarter results have answered all questions about Facebook Inc (NASDAQ:FB)’s ability to monetize mobile user base. Second quarter mobile ad revenues were 46% or $206 million higher than SFG expectations. The beat was driven by strong mobile user growth.

Facebook Inc (NASDAQ:FB) also said it has more active users on mobile than desktop. SFG said it expects Facebook Inc (NASDAQ:FB) to keep attracting mobile ad dollars because of superiority of its offering over other mobile advertising alternatives. But they definitely had not expected acceleration of this magnitude.

Facebook atyracting direct response advertisers

Facebook Inc (NASDAQ:FB) witnessed strong demand from direct response advertisers, mainly in the e-commerce vertical. Direct response advertisers almost doubled their Facebook ad spending YoY. Moreover, solid performance from custom audiences and Newsfeeds drove higher pricing and volume growth.

Analysts said Facebook Inc (NASDAQ:FB)’s unexpected acceleration in advertiser adoption has encouraged Wall Street, and now they expect the stock to rally. The new traction from direct response advertisers shows that the company still has plenty of growth potential. Looking ahead, SFG wants to see evidences of sustainability of this adoption in other verticals.

Susquehanna Financial Group has raised its full year revenue estimate by 8% and earnings estimate by 18%. SFG has also increased its price target for Facebook Inc (NASDAQ:FB) from $24 to $28 with a Neutral rating.

Facebook Inc (NASDAQ:FB) shares were up 24.37% to $32.96 at 12:02 PM EDT.