The ‘Strong Buy’ Case In Facebook: WhatsApp, Instagram And More

Courtesy of Benzinga.

Ivan Feinseth of Tigress Financial reiterated his Strong Buy rating on Facebook Inc (NASDAQ: FB) saying that monetization of mobile, video, Whatsapp and Instagram are strong future catalysts for the stock.

“Ad revenue growth (even at a slower pace) in conjunction with, ongoing investment and development in key growth initiatives as well as in applications will continue to drive strong Business Performance, greater cash flow and increasing return on capital,” Feinseth wrote in a note.

For the quarter ending September 2016, revenue increased 55 percent to $24.7 billion and the analyst estimate this to increasing over 38 percent in the next 12 months to $34.2 billion.

Feinseth is of the view that Facebook’s cautious outlook would prove to be conservative and believes Facebook can maintain above average growth rates and margins despite lower contribution from ad loads.

In addition, the analyst expects artificial intelligence (AI) and virtual reality as the next leg of growth for Facebook. Especially, AI would help Facebook’s clients to better target consumers as spending on digital ads is set to surpass TV ads this year.

At last check, shares of Facebook rose 1.20 percent to $128.57.

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