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Do Instagram And WhatsApp Make Facebook Stock A Buy?

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Shares of social media giant Facebook Inc (NASDAQ: FB) shot up about $0.90 in trading on Friday, April 3 after Citigroup analyst Mark May reiterated a Buy rating on the stock and raised his price target from $91 to $97.

The analyst reasoned his bullish rating on Facebook’s revenue potential for the next three years.

The analyst points out that acquired companies WhatsApp and Instagram are two of the drivers that will help increase Facebook’s potential future revenue and user growth. He noted, “We believe there is significant near-term revenue opportunity for Instagram, WhatsApp, and for layering in e-commerce, payments, and other transactional revenue streams across FB’s app portfolio.”

Facebook just began testing the integration of WhatsApp onto its platform on Android phones. This is the first sign of WhatsApp on Facebook since it acquired the messaging application a little more than a year ago.

With that said, rumors have been circulating that both companies are in the midst of working on a deeper integration that will allow users to send messages between Facebook Messenger and WhatsApp.

Related Link: Facebook Plans For News Inside Its Platform

Although Instagram currently has over 300 million users with more than 70 percent of them outside the United States, the photo sharing application has yet to bring in significant revenue for Facebook. The platform has currently implemented advertising on its Australian and Canadian platforms and is looking to expand advertising measures throughout the next few years.

Mark May has rated Facebook 8 times since July 2013, earning an 86 percent success rate recommending the social media giant and a +25.1 percent average return per FB recommendation. Overall, he has a 64 percent success rate recommending stocks and a +11.2 percent average return per recommendation.

Mark May is no stranger to rating internet related stocks, such as Google Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) and Yelp Inc (NYSE: YELP). The analyst has rated Google 15 times since March 2009, earning a 73 percent success rate recommending the company and a +24.3 percent average return per Google recommendation.

However, May has not always been so accurate with his recommendations. He has rated Yelp 10 times since October 2012 with a mere 17 percent success rate recommending the stock and a -19.0 percent average loss per recommendation.

Latest Ratings for FB

DateFirmActionFromTo
Feb 2018ArgusMaintainsBuy
Feb 2018BMO CapitalMaintainsMarket PerformMarket Perform
Feb 2018Morgan StanleyMaintainsOverweightOverweight

View More Analyst Ratings for FB
View the Latest Analyst Ratings

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Facebook Instagram valuation Mark MayAnalyst Color Long Ideas Analyst Ratings Tech Trading Ideas

 

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