Citi Raises Price Target On Facebook, Says Instagram Is Worth $35 Billion

Citi raised its price target on Facebook, Inc FB Friday from $86 to $91 and maintained a Buy rating.

Analysts led by Mark May raised the target price “On the heels of Instagram’s announcement last week that it had reached more than 300mn users, we examine its potential financial contribution if it were fully monetized given its user base, growth, and engagement metrics.”

“Using what we believe to be conservative assumptions around user growth and monetization, we believe Instagram is worth $35bn – up from the $19bn we had previously estimated due to faster growth in its audience as well as continued monetization gains by social media properties” according to May.

“Instagram is at the early stages of rolling out advertising, but we believe brands have and will find it an effective channel. To frame the opportunity, assuming 420mn MAUs at YE15 (+120mn from current levels), 12.6 average feed views per day and $1.48 revenue per 1000 feed views (65 percent that of Twitter), we estimate Instagram would generate $2.7bn in revenue in CY15,” according to the analyst note.

Facebook, Inc recently traded at $79.92, up 1.94 percent.