Morgan Stanley Says It's Time To Capitalize As Facebook Monetizes Messaging, Instagram Stories

Facebook, Inc. FB's stock is up nearly 30 percent year-to-date, and one analyst team anticipates another 11-percent growth.

The Rating

Morgan Stanley analysts Brian Nowak and John Colantuoni maintained an Overweight rating on Facebook and raised their price target from $190 to $195.

The Thesis

To Nowak and Colantuoni, Facebook’s fate rests largely on the development of a payment system. The offering would help Facebook monetize its messaging service and capture $4 billion in social commerce ad revenue.

“To be clear, we are bullish Instagram’s commerce opportunity as we see large and small brands/retailers leveraging Instagram’s leading reach, data, and ‘browsing/aspirational’ behavior to grow their online businesses…and for Instagram to monetize these transactions,” the analysts wrote in a note.

They consider it a long-term opportunity dependent on adoption of a smooth, integrated payment system. By their assessment, though, monetizing Instagram Stories remains the most important 2019 performance factor.

“The good news is agency conversations on Stories pricing and ROI have been positive (more robust carousel offerings and rollout of conversion based bidding driving increased spend and adoption),” Nowak and Colantuoni wrote.

The analysts raised their full-year revenue and bottom-line estimates by 1 percent.

Price Action

Facebook's stock closed Monday's session at $174.93 per share. Shares were up marginally Tuesday morning.

Related Links:

Guggenheim Upgrades Facebook As Investors 'Gain Comfort' With Content, Privacy Concerns

Facebook CEO Calls For Social Media Regulation