In a report published Monday, SunTrust Robinson Humphrey analyst Robert S Peck maintained a Buy rating onFacebook IncFB
, while raising the price target from $100 to $125. Facebook is expected to report strong 2Q results, with ad revenue growth of 15 percent q/q. Industry data and market checks suggest that the company's q/q mobile revenue growth could be around 20 percent, driven by robust mobile pricing and volume. In the report SunTrust Robinson Humphrey noted, "FB's distribution partners, in particular point to overall FB spend of ~25%, and are extremely excited about the expanded inventory on Instagram and the upcoming Buy Button." "While growth remains robust on the core Facebook platform, investors are focusing even more so on the potential 2H inflection points driven by: a robust Instagram rollout; continued video adoption; the "Buy Button" ad unit; and the Facebook Audience Network rollout," analyst Robert Peck pointed out. Facebook's growth prospects are expected to be driven by the various new revenue opportunities in 2H. While the Buy Button could provide an incremental 5-10 percent revenue lift, Instagram monetization is expected to provide a significant boost to Facebook's total revenues. The EPS estimates for 2Q15, 2015 and 2016 have been raised from $0.46 to $0.47, from $1.97 to $1.98, from $2.70 to $2.75, respectively. Contributions from WhatsApp and Messenger may further boost Facebook's future revenues, Peck said.
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