FBR Likes Facebook Even More After Earnings

• Although Facebook Inc FB shares have declined 10.06 percent over the past one month, they are up 21.35 percent over the past one year.
• William Bird of FBR & Co. has maintained an Outperform rating on the company, while raising the price target from $125 to $130.
• The company reported robust 4Q results, beating the consensus expectations across all metrics. Bird also mentioned that management’s tome regarding business progress was constructive.

Analyst William Bird commented, “Results are supportive of our thesis that FB offers scarce large-cap media growth and attractive structural exposure to the rise in mobile precision brand advertising.”

Bird believes that future value drivers include monetization of WhatsApp and Messenger, Instagram, virtual reality and the potential for delivery of higher quality content, supported by advertising.

According to the FBR report, “FB indicated that it expects the factors that drove the strong growth of its ad business in 2015 to continue into 2016, while also highlighting F/X headwinds and tougher comps as the year progresses.”

Facebook’s data asset, high consumer engagement and proven ability to improve ad performance continue to drive mobile ad share gains. Bird believes that increased m-commerce would lend further support to mobile advertising growth.

In addition, the company indicated that it was “pleased with advertiser adoption of Instagram, as 98 of Facebook’s top 100 advertisers advertised on Instagram in 4Q,” while reiterating that MAUs would be more than 400 million in December.