Oppenheimer: Facebook Still Worth $130

Oppenheimer’s Jason Helfstein maintained an Outperform rating on Facebook Inc FB, with a price target of $130, stating that Instagram revenues are set to expand in the near future.

Marketing agency checks have revealed that more advertisers are launching ad campaigns on Instagram, while existing advertisers are raising their budgets. “We estimate IG represented 1.4% of FB's mobile ad revenue in 2015, and will conservatively increase to 13% in 2018,” analyst Jason Helfstein mentioned.

Instagram Poised For Robust Growth

Helfstein expects Instagram revenues to increase from $981 million in 2016 to $6.2 billion in 2018. This assumes platform users increase 36 percent y/y to 640 million in 2016.

The user base of several Facebook products, including Groups, WhatsApp and Messenger, have reached over 600 M MAUs. The analyst added, “We believe IG can reach similar levels and forecast 985M MAU's by 2018, driven by international users.”

Helfstein noted that a majority of Instagram users live outside the US and expects the non-domestic users to grow as percent of total users. International users represented 86 percent of total MAUs on core Facebook in 2015.

Core Facebook revenues are expected to grow 40 percent in 2016, versus a 47 percent increase in 2015. “Last, beta launch of 60-second video ads should help shift of TV ad dollars online,” the analyst added.