A Few Takeaways From Facebook's F8 Developer Conference

Facebook Inc's FB two-day annual developer conference provides attendees with the opportunity to interact with Facebook products and experts through sessions scheduled over April 18 and 19.

Here are a few takeaways from the conference.

AR/VR Platform

Facebook launched a new Augmented Reality platform, which allows users to overlay graphics onto photos and videos in real time, leveraging new technologies such as SLAM, 3D effects and object recognition.

This platform will help developers create more content and apps that utilize AR features such as face masks, art frames and style transfers.

UBS views the launch of the new AR features as underlining the company's long-term ambitions to control the camera.

Meanwhile, Baird thinks the platform represents a bridge for the company toward greater VR and AR integration.

The company also introduced Spaces, a social VR experience for Oculus Rift, which allows users to meet and communicate in a virtual world through customized avatars.

"While we believe current hardware constraints including price-point and form-factor will likely limit widespread adoption over the medium term, we believe Facebook is uniquely positioned to capitalize on the growing AR/VR opportunities as these devices become more accessible to consumers," Baird analyst Colin Sebastian said.

As with UBS' Eric Sheridan, the timing and scope of monetization of the VR and AR efforts are the key questions now.

Related Link: Why Facebook Is The Best Pure Play In Consumer Internet

User-business Connect Strengthened Through Messenger 2.0

Facebook launched several features to facilitate communication between businesses and users through the Messenger. These features include a bot-based service, which lets businesses to have common questions answered automatically, Messenger Codes, third-party Chat Extensions and M Suggestions, which is a AI-based service for ordering food, making reservations, booking travel and setting reminders.

UBS said it's constructive on Facebook's ability to monetize its Messenger platform over the medium to long term, given the availability of over 100 bots on Messenger and 2 billion businesses to consumer messages being delivered per month.

Baird thinks such "yellow pages" functionality foreshadows Messenger's eventual embrace of payments and commerce, in addition to advertising, as a means of monetizing usage.

Fake News Targeting

Baird noted the company's Chief Product Officer Chris Cox updated on Facebook's media platform, which would help carry more professional content but at the same time reduce instances of fake news. The company also showcased mid-roll ads, which it said would be better than pre-roll or post-roll ads.

Baird believes this feature along with ads in Instant Articles would improve monetization for publishers.

Baird said, "Overall, F8 reinforces our view that Facebook will continue to grow users and revenues through continuous improvement and product sophistication." The firm continues to expect in line or better first quarter results, basing expectations on its positive intra-quarter online advertising checks, and further monetization of Instagram.

UBS continues to see Facebook as a core large-cap Internet holding for strong topline momentum, driven by user and engagement growth paired with continued ad innovations across core Facebook & Instagram against a reasonable valuation.

UBS rates Facebook a Buy, with a $165 price target. Baird has an Outperform rating and a $163 price target for shares.