Facebook Now Worth $110/Share, Morgan Stanley Says

In a report published Wednesday, Morgan Stanley analyst Brian Nowak maintained an Overweight rating on Facebook, Inc. FB, while raising the price target from $94 to $110. The analyst expects the company's low pricing, mobile leadership, new ad units and high ad ROI to continue to drive robust growth for Facebook. Mobile smartphone penetration is expected to ramp from the current 35 percent to 70 percent by 2020, globally. At present, Facebook accounts for 20 percent of mobile time spent in the US. Therefore, the analyst expects the company's global display to grow from 20 percent in 2014 to 30 percent in 2018. "We see upside from monetization given high and growing engagement (64 percent of its 1.4bn monthly users access it daily) and relatively modest CPMs," analyst Nowak stated, while adding that GAAP and non-GAAP expense growth is likely to moderate in 2016, ex-WhatsApp. Given the 1Q results and the positive agency checks for 2Q, the company is expected to see robust acceleration in momentum in 2015. In addition, Facebook's ad revenues have consistently outpaced the industry average. The revenue estimates for 2015 and 2016 have been raised by 5 percent and 8 percent, respectively.