Wedbush: Facebook Video On The 'Cusp Of Ramping Significantly'

Wedbush commented on Facebook Inc FB Monday following a panel discussion with ad agencies.

Analysts Shyam Patil and Andy Cheng felt that spending was solid, video was scaling and Instagram was “quietly ramping,” following the group discussion.

"Our panelists also noted that growth depends on the vertical and mentioned that they are seeing newer verticals start to meaningfully ramp spend on social, particularly auto, education, QSR, entertainment and travel. The panelists generally viewed gaming as stagnant,” according to Patil.

A panelist also mentioned that video advertisers have become comfortable with Facebook and “know how to buy video on Facebook.”

Video was highlighted as appearing near the tippling point and on the “cusp of ramping significantly.”

While video had been only 5 percent of one of the panelist’s budgets last year, in Q1 it was 10-15 percent of its Facebook spend, it was expected to be 15-20 percent in Q2 and 30-40 percent at year-end.

According to Patil, Facebook had been “relatively cautious” in monetizing Instagram, however, “programmatic buying access and more inventory may be opened up later in 2015.”

Overall, the panelists believed “there is a lot of pent of demand from advertisers” and that Instagram could generate $1 billion in ad revenue in 2015.

The firm maintained an Outperform rating on Facebook with a $94 price target.

Facebook Inc closed at $83.01 Monday, up 1.18 percent.