Facebook Inc ( FB ) stock remains a favorite on Wall Street, and unlike Netflix, Inc. ( NFLX ) — a fellow constituent of the FANG stocks  — there don’t appear to be any well-known naysayers.
As the social network grows and adds new ad products, it receives more and more accolades.
Already this year, it has picked up a pair of price target increases as analysts recommend that investors resolve to buy more shares. These increases follow two firms’ naming of the stock as one of their top picks for this year ; one of the two firms (JPMorgan Chase) actually just trimmed its price target for Facebook this month.
Answering the Facebook Controversies
In a research note dated Jan. 11, Credit Suisse analysts Stephen Ju and Christopher Ford reiterated their “outperform” rating and boosted their price target for Facebook stock from $165 to $170 per share. They argued against the controversies that have been surrounding the social network.
The Credit Suisse team called Facebook stock “mispriced” because they feel that it offers a “favorable” risk/ reward. Among the controversial factors they tackled in their note are ad load and growth in operating expenditures, both of which are issues they expect to be resolved to investors’ satisfaction at some point in the next year.
Once these overhangs are cleared, they expect the stock’s multiple to expand to “levels more in-line with” the company’s growth.
One thing they expect to be addressed on the fourth quarter earnings call early next month is operating expenditures, as management will likely give a clearer picture of what investors can expect on this topic in 2017.
The analysts predict that the concerns about revenue growth will be cleared up by the third quarter earnings report or possibly even before then.
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Overall, the CS team doesn’t feel that Wall Street is giving Facebook any credit for the potential of monetizing Messenger, so they see any news on this front as a positive catalyst for its stock. The analysts also believe the Street is underestimating the long-term potential from future products such as Graph Search or even future monetization of current products such as WhatsApp.
In terms of the concerns about slowing growth in ad load, they believe the company can drive long-term growth in its revenue without having to lift ad load materially.
They also demonstrated tracked ways the social network grew its revenue in the past without boosting ad load materially.
In the near term, they see this growth coming from Instagram, Premium Video and Dynamic Product Ads.