Axiom: Facebook More Than Just Social, Worth $150

Axiom’s Victor Anthony believes that Facebook Inc FB is becoming “the world’s largest communications and entertainment platform,” and that the stock therefore deserves to trade at a premium.

The analyst maintained a Buy rating on the company, while raising the price target from $145 to $150.

Five Year Monetization Path

“Facebook’s five-year monetization path looks clearly defined to us, with Core Facebook, including video ads, Instagram, FAN, and Oculus, driving 2016 results, Messenger adding to 2017 results, WhatsApp driving 2018 results, Graph Search monetization getting added in 2019, and the China optionality in 2020,” Anthony mentioned.

The analyst also pointed out that the core platform was robust, and had succeeded in adding another one million advertisers in half the time it took the company to add the first one million.

Beyond Social Media

“Video ads are likely to be the largest driver of core results this year,” Anthony stated, with Instagram expected to add more than 6 pts of incremental growth in 2016.

FAN has also been fainting momentum, generating a gross revenue run rate of $1 billion. While Messenger has seen a series of updates “that point to a clear monetization path.”

In addition, Oculus has launched the consumer version of its headset, which is focused on immersive gaming, although Anthony believes that there could be more use cases.

WhatsApp has been gaining popularity outside the U.S., while Facebook is expected to review monetization options once it crosses the one billion user mark, which WhatsApp is expected to beat in 2016.

The consumer version of the Oculus headset is out and is clearly focused on immersive gaming, although we see more use cases. WhatsApp is popular outside the U.S. and Facebook is likely to look into monetization options post the 1B user mark, which WhatsApp should surpass this year.