Facebook poised to shoot 32% higher, says analyst

A Deutsche Bank prognosticator believes the company has several growth levers it can pull.

| More on:
women on phone

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

A strong performer on the stock exchange since its 2012 initial public offering (IPO), Facebook, Inc (NASDAQ: FB) is well positioned to do even better. That's according to a new analysis of the stock from analyst Lloyd Walmsley at Deutsche Bank, who has raised the target price of the shares to a new "street high."

Walmsley's new level is $385, from the previous $355. The former is more than 32% above Facebook's most recent closing price. He's maintaining his buy recommendation on the stock.

The prognosticator believes that ad spending, a crucial source of revenue for the company, will see a rise. He also feels that worries about upcoming changes Apple Inc (NASDAQ: AAPL) is making to its user privacy settings will become less of a factor in market sentiment.

"We think investor focus is starting to shift away from fears around iOS changes toward a continued ad recovery and benefits from more eCommerce activity shifting into Facebook's platform," Walmsley wrote in his research note explaining the price target hike.

Facebook already has a massive user base, so it can't rely on significant improvement in those numbers to drive its business forward. Rather, it will be reliant on expanding advertising take and other revenue sources for meaningful growth.

Walmsley thinks that it has several levers it can pull for this, including the Tik Tok-like Reels video feature on Instagram. He's estimating that Reels can potentially pull in $21 billion in revenue.

Investors seem to be buying this argument. On Monday, Facebook shares trounced the S&P 500 Index (INDEXSP: .INX) by rising to close 2.8% higher on the day.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors.  The Motley Fool owns shares of and recommends Apple and Facebook. The Motley Fool recommends the following options: long March 2023 $120.0 calls on Apple and short March 2023 $130.0 calls on Apple. The Motley Fool has a disclosure policy.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Eric Volkman owns shares of Apple and Facebook. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Apple and Facebook and recommends the following options: short March 2023 $130 calls on Apple and long March 2023 $120 calls on Apple. The Motley Fool Australia has recommended Apple and Facebook. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on International Stock News

Semiconductor chip on top of piles of mini US and China flags.
International Stock News

Tariff negotiations could derail Nvidia's China business. Here's why I'm not worried about It.

New export controls around China could serve as a serious headwind for Nvidia.

Read more »

A head shot of legendary investor Warren Buffett speaking into a microphone at an event.
International Stock News

Warren Buffett-led Berkshire Hathaway has 21% of its $276 billion portfolio in 1 stock that's up 644% in 9 years

Investors need to know what company this is. Perhaps it deserves a closer look for your own portfolio.

Read more »

Two IT professionals walk along a wall of mainframes in a data centre discussing various things
International Stock News

Amazon just sent a massive warning to Nvidia investors

A new AI investment from the cloud computing leader could signal a shift in its strategy.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
International Stock News

Countdown till Nvidia's earnings report: What to expect?

Nvidia reports Q1 earnings on May 28.

Read more »

A man in a suit face palms at the downturn happening with shares today.
International Stock News

Which Magnificent 7 company was threatened with fresh tariffs over the weekend?

The news was not well received by investors.

Read more »

Man charging an electric vehicle.
International Stock News

Why June will be a make-or-break month for Tesla

Next month's launch will have huge consequences for Tesla's stock.

Read more »

A head shot of legendary investor Warren Buffett speaking into a microphone at an event.
International Stock News

26.4% of Warren Buffett's $258 billion portfolio is invested in 2 leading artificial intelligence stocks

Let's check out these two AI leaders that Buffett loves and consider whether they're still buys today.

Read more »

Hand with AI in capital letters and AI-related digital icons.
International Stock News

Could Nvidia stock help you retire a millionaire?

The reality is Nvidia should see strong sales growth for quite a while.

Read more »