Facebook's Stock Has Another 25% Upside Despite Some Problems Ahead, Analyst Says

The path forward for Facebook Inc FB remains favorable, but there will be some bumps in the road, James Cakmak, an analyst with Monness, Crespi, Hardt, explained as a guest on CNBC's "Squawk Box."

First, Facebook could be operating in an environment of "peak margins" as video become an increasingly important segment of the social media's revenue base, the analyst said. Facebook is working on video in two forms, the first being a "cheap" short format, but the second being a long format that will be a "premium type of experience."

As such, Facebook will see higher content costs associated with video and do so at a time when Netflix, Inc. NFLX and Amazon.com, Inc. AMZN are spending between them $10 billion on video content.

"To what point is [Facebook CEO] Mark Zuckerberg willing to go in order to compete for those TV audiences," the analyst asked.

Meanwhile, Facebook's average revenue per user has been slowing for four consecutive quarters which demonstrates the company needs new levers like video to drive engagement and offset a decline in impressions.

But despite these concerns the case can be made for a further 25 percent upside, Cakmak acknowledged. Nevertheless, the near-term concerns are sufficient enough for the analyst to maintain a Neutral rating on the stock.

At last check, shares of Facebook were up 4.24 percent at $172.63.

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