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Facebook Focusing On Other Realities As Company Unveils Plans For Next Phase

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Facebook Focusing On Other Realities As Company Unveils Plans For Next Phase
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Commenting on Facebook Inc (NASDAQ: FB)'s F8 Annual Developer Conference, Pacific Crest Securities, a unit of KeyBanc Capital Markets, said the company is focusing on other realities.

Realities Sinking In

Analysts Andy Hargreaves, Evan Wingren and Tyler Parker noted that the keynote focused on efforts to integrate augmented reality throughout its platform, add social virtual reality and expand the capability of Messenger through bots.

Lights, Camera, Action...

The analysts noted that the company's CEO Mark Zuckerberg focused on emphasizing efforts to make the camera more central to the consumer experience across Facebook's properties.

These included a host of augmented reality, or AR, features and opening the AR platform up to developers, allowing them to create their own filters, masks, frames and other AR items, the analysts said.

That said, the analysts feel the efforts are in response to Snap Inc (NYSE: SNAP)'s Snapchat, which announced and enabled such features earlier in the day.

Additionally, the analysts also think these could be aimed at furthering the visual nature of its platform to allow for more diverse and compelling advertising solutions.

Weird VR

Pacific Crest Securities noted that Facebook introduced Spaces, a social VR system, which allows consumers create a digital version of themselves and then hang out in virtual spaces with digital versions of other people.

However, the firm believes VR remains eons away from mass-market adoption, as the service continues to make a portion of users feel ill, has unclear long-term impacts on the brain and demands the use of awkward headsets and controllers.

Bots Open Up Incremental Monetization Potential

The firm believes the company is firmly moving Messenger into a monetization phase. The deduction is based on Facebook's unveiling of the Messenger Platform 2.0, with a discover tab to help consumers more easily find and interact with bots, and chat extensions that allow more than one user to interact with bots or apps at the same time.

"These tools should help consumers interact with businesses and help businesses create and complete transaction opportunities directly through Messenger," the firm explained.

Core Advertising: Near-Term Growth Driver

"We view these as appropriate long-term investments that establish the foundation for multiyear growth opportunities, but expect the core advertising business to remain the dominant growth driver for the next several years," the firm said.

Meanwhile, the firm continues to believe Facebook's scale and data advantages offer tremendous opportunities to drive core advertising growth ahead of expectations in the coming years.

Pacific Crest Securities has a $155 price target on the shares of Facebook, while it said it would continue to recommend owning the stock.

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Latest Ratings for FB

DateFirmActionFromTo
Apr 2017Credit SuisseMaintainsOutperform
Mar 2017BarclaysInitiates Coverage OnOverweight
Mar 2017BTIG ResearchUpgradesNeutralBuy

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