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Share price sun shines on Facebook as analyst changes his mind


By Noel Young, Correspondent

January 1, 2013 | 3 min read

Facebook may have turned the corner at least as far as its stock price is concerned. The most critical analyst among those at the banks that backed the IPO "has had a change of heart", says the Wall Street Journal.

Facebook: looking brighter

Daniel Salmon of BMO Capital Markets has upgraded the stock to “outperform,” effectively saying that it's now a "buy.". Perviously he rated it “underperform,” the equivalent of 'Sell.' Salmon has doubled his price target for the stock, to $32 from $15.

Reason for the change of tune: Salmon says large advertisers are spending more money on marketing through the social network in order to expand their reach on mobile devices. He expects them to use more video ads on Facebook’s mobile platform.

Facebook’s share price has been between $25 and $28 over the past month. After the company’s troubled initial public offering in May, shares sank falling 53% from their $38 IPO price to a closing low of $17.73 in September. The stock has since climbed 49% to its recent Monday price of $26.43.

What's changed? . The company this summer started Facebook Exchange, a product that lets advertisers bid on ad space based on users’ browsing history. Another new feature lets mobile-application developers pay for Facebook ads to spur more downloads of their products.

BMO likes the company’s custom audiences feature, which lets advertisers combine their lists of customer contact information with Facebook data.

Facebook is also doing well on mobiles:14% of its advertising sales came from mobile devices in its last reported quarter, "up from an insignificant figure a year ago," said the WSJ.

Stifel Nicolaus analyst Jordan Rohan is also upbeat , raising his target price for the shares to $31 from $26.

“We believe the trading pattern will shift from fear of massive selling to excitement,” he wrote in a note to clients.


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