Facebook Running on Raymond James Upgrade

Early Friday morning, Raymond James analyst Aaron Kessler released a report on Facebook

, upgrading the company from Outperform to a Strong Buy rating, while giving it a $37 price target. The report focused on a few major factors that would provide growth to the company: First was increased monetization from advertising. This was defined not only from increased ads on the platform itself, but also new ad formats that could provide a higher margin to the social network. The second was an expectation of mobile strength in the company's first-quarter report. Research done by Kessler claimed that mobile now accounts for roughly 30% of customer spending on ads vs 20% last quarter. With pundits pounding their fists on the table asking for more mobile each quarter, this metric, if true, would be sure to please the street. On the topic of valuation, the report noted that Facebook had been valued at 0.6x EV/EBITDA/ growth ratio, which is slightly below the standard multiple of 0.8x for the tech industry. Facebook is set to report earnings Wednesday, May 1st, and is expected to report an EPS of 0.13, 4 cents below its prior report, while the company is expected to report revenues of 1.44 billion, again below its prior report of 1.59 billion. With analyst estimates coming in lower than last quarter, and mobile adoption expected to rise, this quarter could be a very good one. If the company were to report something close to in line with its fourth-quarter 2012 results, traders could see a significant pop in the shares, especially if the mobile numbers come out looking as good as Aaron Kessler expects in his report. Following the upgrade, Facebook traded up 1.68 percent in pre-market trading to $26.58.