BMO Says Facebook Is 'A Core Holding,' Raises Price Target To $145

Facebook Inc FB reported robust 2Q16 results, with key metrics ahead of expectations.

BMO Capital’s Daniel Salmon maintains a Market Perform rating on the company, while raising the price target from $120 to $145.

Beat Quarter

Facebook reported its non-GAAP EPS for 2Q16 at $0.97, significantly ahead of the estimate and the consensus, while revenue also beat expectations, coming in at $6.44 billion.

Mobile ad revenue stood at $5.24 billion, ahead of the estimate of $4.74 billion, while total ad revenue grew 63 percent year-on-year.

Related Link: Axiom's Victor Anthony: Keep Buying Facebook, Stock Is Still Cheap

The adjusted EBITDA was well above the estimate and consensus at $4.14 billion. Price per ad rose 9 percent year-on-year, while total ad impressions rose 49 percent.

“Impressive ad revenue growth and share gains continue to overwhelm any concerns we have about future investment in content or the ramp of messaging app monetization,” Salmon mentioned.

The analyst believes Instagram is becoming a more meaningful driver of outperformance for Facebook.

A Core Holding

In addition, although the monetization of Messenger is still at some distance, insights from increasing interactions between businesses and users has the ability to generate data that feeds back into the other three platforms, thereby helping the company to improve ad performance.

“We continue to be positively inclined on the shares and see them as a core holding and look for an incremental thesis to get more proactive, and we’re focused closely on the evolution of Messenger activity beyond communications to more everyday behaviors, especially commercial ones,” Salmon added.

At time of writing, Facebook was trading at $127.54, up 3.41 percent within the first hour of Thursday's regular trading session.

Full ratings data available on Benzinga Pro.