Facebook shares have been bouncing around a lot lately, carried to and fro by Wall Street’s desire for them and its fear about whether they can continue to run after the tremendous tear they’ve been on over the last few years. Facebook Inc (FB) has obviously replaced Apple as Wall Street’s favorite, especially given that it’s the first stock in all three of the popular acronyms being written about right now: FANG, FAAMG and FAANG.

facebook shares
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Facebook shares tumble, but only briefly

On Friday, Facebook Inc (FB) shares pulled back, but it didn’t last long so they ended the regular trading hours up by 0.56% at $150.64. The stock has climbed by about 30% over the last 12 months, and there seems to be no expectation of an end to its climb. However, Piper Jaffray analysts believe that Facebook shares could hit a ceiling soon and become range-bound.

In a note to investors, analyst Samuel Kemp explained that he believes Facebook shares have now baked in all of the expected upside to ad revenue in the second half of the year. He sees the realistic upside as being between 200 and 300 basis points on top of the Street’s ad revenue estimate for the second half of the year. That would result in revenue coming in 2% to 3% above expectations and earnings per share being 5% to 6% higher than what the Street is expecting from the social media giant.

Overweight on FB “for the long haul”

Kemp explained that Facebook Inc (FB) shares have risen 34% year to date due to multiple expansion, even as earnings per share estimates have been revised downward. The stock now trades at a PEG of 1.2 times, compared to the average of 0.9 times since 2015. He feels that this indicates the Street is pricing in between 7% and 10% upside to earnings per share for 2018, and he sees this level of upside as being likely. However, he thinks the buy-side is estimating results that are much further ahead of the sell-side.

He’s not advising investors to be cautious about Facebook Inc (FB) shares, but he does point out that as the expected beats actually come to pass, they may shift into range-bound mode until investors shift their focus to 2018 estimates and catalysts, such as Instagram and Messenger.

The analyst said he remains Overweight on Facebook Inc (FB) shares “for the long haul,” and looking past the current opportunities, he sees significant potential for monetization in Instagram as a major catalyst for 2018. He expects Instagram revenue to rise from $2 billion last year to $22 billion by 2021 and predicts that Messenger can disrupt the customer service industry. Based on all of these factors, he expects the social networking firm’s revenue to triple over the next five years.