Stifel Equity Trading Desk analysts Jordan E. Rohan, Michael B. Purcell and Alex Chavdaroff rate Facebook Inc (NASDAQ:FB) as a Buy as they look beyond its massive advertising engine.

Facebook

Recent checks suggest Facebook Inc (NASDAQ:FB) continues to gain share of overall marketing spend. But the interest in the Facebook platform is coming from branding, public relations, direct response, and customer relationship management functions — not just from online search or display. We are raising estimates for the quarter and future periods. Our price target increases from $72 to $82.

More than just advertising

Our recent channel checks suggest that marketers view Facebook Inc (NASDAQ:FB) as a strategic communications platform, capable of establishing and reinforcing relationships with consumers. Facebook helps with direct response marketing, branding, public relations,and customer relationship management (CRM). Having proven the efficacy of its ads in 2013, Facebook now stands to receive a significantly higher proportion of clients’ marketing budgets, particularly from sophisticated marketers who have committed resources to track the efficacy of FB spend.

Still not sure what’s up with WhatsApp

We believe the acquisition of WhatsApp makes strategic sense, even though the valuation is still perplexing. However, Facebook Inc (NASDAQ:FB)’s core business fundamentals are so strong that investors are likely to give the company leeway to take bigger risks, even at extended valuations.

Estimates raised

We are raising our revenue and earnings estimates. We have added 6-7% to our 1Q14 revenue and EBITDA estimates. In 2014, our revenue estimates increase 2.5% to $11.7bn (vs. $11.3bn consensus) and PF EPS rises $0.05 to $1.31 (vs. $1.26 consensus). If our checks prove correct, another inflection quarter is possible in 1Q14.

Facebook’s price target raised

We apply a 35x multiple to our 2016E PF EPS. Our price target rises from $72 to $82, based solely on increased estimates, with our 2016 PF EPS increasing from $2.07 to $2.33.