stock (ticker: FB) will rally because of growth opportunities in e-commerce and messaging, and it looks like a bargain right now, according to MoffettNathanson, which upgraded the stock on Tuesday.
The back story. Facebook shares have risen more than 30% so far this year. In April, the company reported better-than-expected first-quarter results.
Last week, both The Wall Street Journal and Reuters reported that the Federal Trade Commission (FTC) has jurisdiction to lead any antitrust probe into the social-networking company.
What’s new. MoffettNathanson analyst Michael Nathanson on Tuesday raised his rating to Buy from Neutral for Facebook stock, citing the company’s attractive valuation.
The analyst said Facebook is trading at just 10 times his 2020 estimate for enterprise value to earnings before interest, tax, depreciation, and amortization, or Ebitda while he predicts it will grow its Ebitda at more than 20% a year over the next two years.
“When comparing across a broader set of metrics among our Internet coverage group, Facebook stands out as being the cheapest despite having the strongest projected growth,” he wrote.
“While regulatory scrutiny has risen to new highs over the past week, we believe that improving underlying fundamentals more than offset this risk,” he wrote. “Commerce and messaging are also shaping up to be new revenue opportunities to drive growth longer-term.”
Facebook stock was up 2.5% to $179.14 on Tuesday, while the
had risen 0.5% to 2901.93, the
Dow Jones Industrial Average
had advanced 115.06 points, or 0.5%, to 26,177.74, and the
had gained 0.8% to 7882.59.
Looking ahead. The analyst reaffirmed his $210 price target for Facebook shares.