New Year, Same Rating: J.P. Morgan Still Bullish on Facebook
Case in point: The latest “buy” rating coming from J.P. Morgan Chase, complete with a shiny new price target raised to $35, up six bucks from the firm’s previous figure. That’s courtesy of Doug Anmuth, JPM’s Facebook analyst, who has been bullish on the social giant’s prospects since early on. In his latest research note, Anmuth echoes Facebook’s common refrain: Facebook’s ad prospects are still in the early days.
This comes as Facebook continues trying to convince investors that its mobile monetization strategy will eventually yield strong returns, given consumers’ massive shift to mobile devices in recent years. Facebook isn’t there yet, mind you, as the company still continues to see the lion’s share of its revenue come from desktop ads. But not for long, according to JPM: The firm expects Facebook’s mobile revenue to surpass that of desktop revenue by 2014.
For the time being, Anmuth is impressed with Facebook’s recent inroads. Facebook’s Exchange product makes good use of third-party data; that hopefully should result in better ads being shown to users, and better returns to advertisers overall. And he believes that Facebook’s most recent push into e-commerce with “Gifts” paid off significantly, bringing in a new revenue stream just in time for the holiday season.
Despite the bright outlook from J.P. Morgan, Goldman Sachs and Morgan Stanley — its three largest underwriters — Facebook’s stock hasn’t lived up to initial expectations. Share prices were cut in half during the first six months of trading, down from an opening price of $38 per share.
But Facebook has fared better on the market in recent days, hovering around the $26 to $28 range over the past two months. Shares closed at $26.62 on Monday, the last day of 2012 trading. The bulls expect that number to keep going up in the New Year.
Now Facebook needs to make its own New Year’s resolution: Proving those analysts right.