Facebook's Valuation Doesn't Reflect Its Industry-Leading Status

Bonner maintains a Buy rating on Facebook's stock with a price target boosted to $176 despite some concerns if Facebook's warning of slower ad growth will impact its advertising revenue growth moving forward. The analyst is also concerned that the social media's empire next-generation services such as Instagram, WhatsApp and Messenger "may not provide significant revenue growth" in the near term.

Bonner also noted Facebook's ad loads are expected to slow down in the bottom half of 2017, which in turn could slow overall revenue growth. In addition, Facebook's own management team acknowledged 2017 will be a year characterized by "aggressive" investments, which implies the potential for quarterly revenue or earnings misses.

The Positives

Despite the analyst's concerns, he still has a "favorable view" of Facebook. Specifically, the company is well positioned to benefit from the company's initiatives of moving audiences and advertisers toward digital video.

Also important to note, Facebook is still able to post double-digit growth in not only user growth but average revenue per user. This alone is a "remarkable" achievement, especially for a company the size of Facebook.