Analysts Like Facebook’s Long-Term Prospects, But Still Unsure About Mobile Revenue

By Justin Lafferty 

It has been a rocky road for Facebook after its initial public offering. The reports of several Facebook underwriters were released Wednesday, as analysts feel that the company will be fine long-term, but there are still some lingering doubts about turning mobile usage into money.

CNBC wrote that top Wall Street analysts have “muted optimism” about Facebook’s long-term revenue potential. Analysts feel that Facebook will be able to grab a significant share of the Internet advertising market.

Wells Fargo’s Jason Maynard is bullish about Facebook’s long-term potential:

Facebook’s platform is highly personalized, lives in the cloud, operates across any number of devices, and encompasses user content, communication, context, and commerce. The end result is an ever-increasing amount of personalized data that feeds the platform and makes it more valuable.

Banks also gave their estimate as to Facebook’s value now. Oppenheimer pegged it at $41 per share (it’s currently trading at $32.23); Goldman Sachs $42; RBC $40; Bank of America, Merrill Lynch, and Morgan Stanley all have it at $38; Citi and Barclays feel it’s worth $35 per share; and BMO Capital Markets set a share-price target of just $25.

Many of the banks raised concerns about how Facebook can cash in on users who access the site on phones. Bank of America/Merrill Lynch’s Justin Post is one of the analysts who is hesitant because of Facebook’s mobile quandry:

The company is in the midst of a mobile usage transition, and we are cautious on Facebook’s revenue trends until new mobile ad revenue models start driving the top line.

Meanwhile, BMO Capital Markets cited slow user growth as the reason why it feels Facebook will underperform its IPO. Daniel Salmon of BMO was the one analyst to give Facebook a negative rating. He explained:

Slowing user growth is one of our primary concerns for Facebook’s current valuation (we estimate 22 percent in 2013 and 16 percent in 2014). To be fair, this is hardly a knock on the company; it just so happened that the company rocketed to 50 percent-plus penetration of the global Internet population faster than any product in the Web’s short history.

Readers: Stock market value-wise, what do you feel is in store for Facebook down the road?

Image courtesy of Songquan Deng / Shutterstock.