Goldman Hikes Facebook To $125

• Shares of Facebook Inc FB have appreciated 40.17 percent year-to-date, from a low of $74.05 on January 15.
• Goldman Sachs’ Heather Bellini has maintained a Buy rating on the company, while raising the price target from $110 to $125.
• The company reported robust results for 3Q15, underscored by acceleration in ad revenue growth.

Analyst Heather Bellini elaborated that Facebook reported total revenue of $4.50 billion, representing 51 percent growth on a constant currency basis and ahead of the consensus. Ad revenue also beat the consensus, with accelerating growth occurring for the first time since 1Q14.

Non-GAAP operating margins also came in marginally ahead of the consensus, while the non-GAAP EPS beat the consensus, driven by lower than anticipated taxes.

Related Link: Facebook's Q3 Earnings Impressed Investors - Was Wall Street Equally Impressed?

Bellini believes that “Instagram, ad format innovation like carousel ads, and the proven advertiser ROI of the Facebook platform are driving accelerating adverting revenue growth.”

According to the Goldman Sachs report, the company is expected to see “strong momentum into 4Q15 given the holiday season and worldwide rollout of Instagram.”

“FB management may have quelled investor fears of an expense growth surprise in CY16 given commentary that Oculus’s virtual reality platform could take time to develop and might just sell hundreds of thousands of units in its first year,” Bellini added.

The CY16 ad revenue and non-GAAP EPS estimates have been raised. The CY16 expense growth estimate has also been marginally raised.