Citigroup Reiterates Buy Rating, $57 PT on Facebook on Multiple Potential Upside Drivers

In a report published Friday, Citigroup analyst Mark May reiterated a Buy rating and $57.00 price target on

. In the report, Citigroup noted, “Cautious investors often cite Facebook's recent stock run and valuation, or the ad load headwind, but the key question should be: what is FB's long-term earnings potential and how do you get there? Not unlike how Google was able to grow from a similar revenue level as FB today ($7-8bn) in ‘05/06 to >$20bn just two years later (and to >$50bn in CY12), we believe FB has a similar opportunity to leverage its global user scale, identity-based data asset, >1mm advertiser base, and technical/product development capabilities to enhance its existing business and expand into natural adjacencies. But, what are the likely key levers and building blocks? In this report, we detail analysis of five key potential drivers of incremental upside, including 1) increased core eCPMs, 2) Instagram ads, 3) video ads, 4) fillrate, and 5) a third-party ad network. In short, using reasonable assumptions, we believe these drivers in aggregate could add $3bn in incremental revenue and $1.8bn in adj. EBITDA in two years and represent the path to $70/ share.” Facebook closed on Thursday at $51.24.