Facebook Inc (NASDAQ:FB) shares have been performing spectacularly since the social network’s last earnings report, and now Topeka Capital analysts are joining others in raising their price target for the stock. Victor Anthony issued a report late last week saying he was raising his price target to $47 per share from $40 per share. He continues to rate the stock as a Buy.
Topeka’s new valuation for Facebook
According to Anthony, they shifted their valuation time frame from the end of this year to the end of next year. As a result, their price target was lifted. However, he said their valuation on Facebook Inc (NASDAQ:FB) does not take into account the possibility of increased monetization by the addition of advertising on Instagram.
He also said they do not include the possibility that Facebook Inc (NASDAQ:FB) will include auto-play video ads on its site. In their view, auto-play video ads plus advertising added to Instagram are, together, worth between $3 and $5 per share in value.
Facebook advertising trends look positive
He believes Graph Search and ecommerce “hold meaningful value” over the longer term. In addition, the analyst said their checks of advertising on Facebook Inc (NASDAQ:FB) continue to show “positive trends.” He said the social network’s stock remains their “top pick over the next year.”
Topeka Capital isn’t the only firm to recognize that advertising trends at Facebook are improving. Raymond James analysts believe the social network’s advertising revenue will be $1.63 billion for the current quarter and be driven mostly by 12 percent sequential growth in mobile advertising. They believe desktop advertising will fall 5 percent, meaning that the 12 percent mobile growth will more than offset desktop declines.
Analysts are also expecting big things from Facebook Inc (NASDAQ:FB)’s upcoming video ads and continue to look forward to the addition of ads on Instagram. At this point Facebook Inc (NASDAQ:FB) management has not indicated when they will start to monetize Instagram, although it’s widely expected that they will soon.