Bank Of America Lowers Facebook Price Target, Remains 'Constructive' On The Stock

Facebook, Inc. FB CEO Mark Zuckerberg's vision for the future of the social media platform prompted BofA to turn less bullish on the stock.

The Analyst

Bank of America's Justin Post maintains a Buy rating on Facebook with a price target lowered from $205 to $187.

The Thesis

Zuckerberg explained in a public post his vision of focusing more on a privacy-focused social media platform along with an encrypted messaging network, Post said in a research report. Following the announcement two senior Facebook executives, Chief Product Officer Chris Cox and head of WhatsApp Chris Daniels quit the company.

POst said the timing of the departures, even if Cox has been planning to leave for some time, "raises some concern" around internal conversations and thoughts related to Zuckerberg's new vision.

From a business perspective a new vision of Facebook's platform "could raise questions" about its financial outlook. Specifically, private messaging platforms are monetized at a lower rate compared to the core news feed which may see declining usage in the future.

For the time being the analyst remains "constructive" on Facebook's stock as activity within the core news feed is showing signs of stabilization after troughing in the summer. But a more cautious stance on the stock could be warranted if a deterioration in usage data is observed in the future.

Price Action

Analysts at Needham downgraded Facebook's stock to Hold on Monday. Shares were trading lower by 1.2 percent at $164.01 ahead of Monday's market open.

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