Shares of Facebook Inc FB have gained more than 50 percent over the past year-and-a-half. However, RBC Capital Markets analysts still recommend taking long positions in the stock. Having said this, the experts introduced several key updates to their long thesis.
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Overall, RBC analysts believe Facebook is attractively valued, and that markets underappreciate the company’s product innovation initiatives and their impact on the site’s user and usage growth, long-term P&L potential and monetization momentum.
The three main updates introduced in the model are:
- 1) The recently launched ad product innovations and improvements should drive top line upside.
- 2) New video offerings should help augment engagement upside.
- 3) Facebook’s messaging platforms provide substantial opportunities as the company increases monetization. “Facebook’s Messaging Platforms could generate more than $10 billion in 2020 Revenue, which would likely be well north of 10 percent of FB’s Revenue.”
RBC maintains an Outperform rating and $165 price target on shares of Facebook.
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