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Facebook A Top Internet Idea, Bank Of America Adds It To 'US 1 High-Conviction List'

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In a report published Tuesday, Bank of America analyst Justin Post added shares of Facebook Inc (NASDAQ: FB) to the "US 1 high-conviction list" which represents a "collection of Bank of America Merrill Lynch's top investment ideas."

According to Post, Facebook is a top idea in the Internet space given its mobile exposure and growing time share in the space. The company has also demonstrated improvements in its ad targeting, video traction while it is also ramping Instagram (and new platforms) ad growth.

Shares of Facebook closed Monday at $97.91 and were up about 0.77 percent in Tuesday's pre-market session.

Post said that Facebook represents a "market share gainer story" as the company is expected to capture 13 percent of the U.S. and Canada online advertising market share in the near-term and further expand its share to 15 percent in 2016. Moreover, the company's global online advertising market share is expected to grow from its current 11 percent to 13 percent in 2016.

"We see Facebook as the best positioned Internet media company to capitalize on media sector trends as we expect the company to take disproportionate share of ad industry spend as Facebook remains a top beneficiary of mobile Internet adoption," Post wrote.

Momentum Isn't Slowing

Post commented that Facebook's usage trends remain "favorable" and offered the following trends and statistics to support his bullish thesis:

  • Total U.S. Internet time spent on and Messenger increased to 19.8 percent in June 2015 from 18.1 percent in the same month a year ago.
  • Facebook and Messenger's June total U.S. minutes rose 32 percent year-over-year, outpacing the overall 19 percent industry growth.
  • Instagram's global monthly active user base rose to 300 million as of the end of 2014, up from 180 million in the fourth quarter of 2013.
  • Messenger global users now exceed 600 million users, up from 500 million in the fourth quarter of 2014.
  • WhatsApp global users exceeded 800 million in the first quarter, up from 700 million in the fourth quarter of 2014.

Shares remain Buy rated with an unchanged $105 price target.

Latest Ratings for FB

Apr 2018Morgan StanleyMaintainsOverweightOverweight
Mar 2018Bank of AmericaMaintainsBuyBuy
Mar 2018BairdMaintainsOutperformOutperform

View More Analyst Ratings for FB
View the Latest Analyst Ratings

Posted-In: Bank of America Facebook Ads Instagram Justin Post US 1 High Conviction ListAnalyst Color Analyst Ratings Tech


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