Facebook has officially arrived in the mobile space, according to analysts at Argus. They have upgraded the social network’s stock based on the success of its two smartphone apps and its successful transition from desktop to mobile. They also like the company’s opportunity in virtual reality.

Facebook Inc (FB) Upgraded For Mobile Success

Facebook’s mobile apps are a success

In a report dated Oct. 14, Argus analyst Joseph Bonner said he upgraded Facebook from Buy to Hold and set a price target of $115 per share.  He noted that Facebook now has the two most popular smartphone apps in the U.S. and now thinks that the social network has successfully transitioned to mobile from desktop—a conclusion most other firms already made some time ago.

He also noted that Facebook is increasing advertising, thus gaining more and more traction in monetization as it makes itself more appealing to users. The social network is also pushing further into e-commerce with the testing of a new shopping feature on its app. Users who click on an ad will open up a catalog instead of the advertiser’s website. Bonner sees the biggest draw for Facebook here as being more access to user data because, at least for now, the social network is not keeping out a commission from purchases made through this new feature.

Facebook steps into VR

Also the company is expanding into virtual reality with the planned release of the consumer version of the Oculus Gear VR headset. The analyst thinks that in the near term, Oculus might cut into Facebook’s margins, but on the flip side, he expects the social network to remain the top social media platform.

Gear VR becomes available for purchase in November, just in time for the holiday shopping season. Oculus teamed up with Samsung for the virtual reality headset, which is priced at $99 and will be compatible with Samsung’s newest smartphones.

Bonner also noted that Oculus has started to line up content partners like Netflix, 20th Century Fox and Lionsgate for movies and Microsoft for video games, including the popular building and crafting game Minecraft. There won’t be PC hardware that will be compatible with Oculus’ headset until early next year, however.

Facebook estimates raised

As a result of all these conclusions, Bonner upped his earnings per share estimate for this year slightly from $2.03 to $2.04 per share. He raised his estimate for next year by 3 cents to $2.39 per share. The social network is scheduled to release its next earnings report early next month.

The Argus analyst thinks that Facebook’s valuation is in line with that of its peers, but he doesn’t think it “adequately” reflects the social network’s dominance in the social media space.

Tags: