Analysts Bullish So Far On Facebook IPO

By David Cohen 

Analysts are starting to chime in on Facebook’s May 18 initial public offering, and so far, the chiming has been in harmony with the social network.

According to The Wall Street Journal’s Deal Journal blog:

  • Sterne Agee initiated coverage of the Facebook IPO Monday, rating it as a “buy.”
  • Wedbush Securities got into the act Friday, assigning Facebook stock a rating of “outperform” and a price target of $44 per share.
  • Evercore Partners Analyst Ken Sena said Facebook should be valued at $140 billion to $160 billion (Facebook is targeting a valuation of between $77 billion and $96 billion).
  • Susquehanna Financial Group Analyst Herman Leung wrote that Facebook’s valuation is “attractive” at the targeted range for its share price, but he cautioned that mobile growth could hurt the company’s bottom line, and its “culture of putting users first might create near- and medium-term financial volatility,” adding that the social network has seen “mixed reviews from advertisers.”

CNET reported that Sterne Agee Analyst Arvind Bhatia believes Facebook’s share price could reach $46 within the next 12 months, adding that Bhatia wrote:

Our estimates would be achievable if Facebook increases its share of online advertising by only 300 basis points, from 5 percent in 2011 to close to 8 percent by 2016. In addition, we have very little contribution from mobile and China modeled currently, and, as such, our estimates could prove conservative. Together, mobile and China could add $1.5 billion in incremental revenue and $600 million in incremental EBITDA (earnings before interest, taxes, depreciation, and amortization) by 2015.

We believe Facebook is in the early innings of revolutionizing the $600 billion worldwide advertising market, particularly the subsegment of online advertising.

Readers: How do you believe Facebook’s stock will perform following its May 18 IPO?

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