After attending the Oculus Connect 4 conference, Bank of America Merrill Lynch analyst Justin Post has maintained a Buy on Facebook Inc FB and a $190 price objective.
The biggest news was the announcement of the Oculus Go, a $199 standalone virtual reality device that's expected in early 2018, Post said in a Thursday note. (See Post's track record here.)
Oculus for Business; a price cut on the Rift Bundle; and enhancements to Oculus and Facebook VR environments were among the announcements at the conference in San Jose, according to BofA.
Facebook can be a leader in the VR business, as it is focused on lower entry prices and growing content, Post said. While Oculus isn't expected to make a material financial contribution to Facebook in the next 12 to 18 months, Post said he's impressed with Oculus Go. The device eliminates the wire that's present with premium VR offerings and the mobile phone of mid-range solutions.
The VR experience with the Go is below that of premium counterparts, Post said. It has limited motion capture capabilities, and the battery life of the device is still unkown.
The $190 price objective is based on 29x GAAP EPS, mostly in line with the social and online media sector. Risks for the price objective include high valuation that discounts growth; changes in user engagement; privacy issues; risks to executing Messenger & WhatsApp monetization; a negative impact on margins because of higher investment; and a negative macroeconomic impact on advertising prices.
Related Links:
Facebook's Oculus Setting Sight On Cheaper Headgear Launch In 2018
SHIFT Tech Summit In Detroit Looks At What's Next In Virtual Reality
Photo courtesy of Oculus.
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