UPDATE: Citigroup Raises Price Target for Facebook, View as 'Best Growth Story in the Internet Sector'
In a note released Tuesday, Citigroup analyst Mark May reiterated the firm's Buy rating on Facebook (NASDAQ: FB) and raised the price target from $70 to $85.
In raising the price target May looked to three key points: the WhatsApp acquisition, ads on Instagram, and video ads on Facebook.
Looking to 2014, May outlined four themes he believes will continue to drive growth: 1) continued RPM (revenue per thousand ad impressions, or monetization) gains due to the mix shift toward higher valued News Feed ads and from increases in like-for-like ads from improved targeting & analytics; 2)continued growth in mobile app adds as installs remain in high demand and adoption of app engagement ads; 3) monetization of Instagram (e.g., see recent $100mn contract with Omnicom); 4)wider rollout of video ads on Facebook and Instagram, which they believe could have 2x-plus eCPMs than standard ads.
At last check, Facebook was trading down 1 percent at $71.31.
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