Facebook (FB): Video First Ensures Growth Despite Falling Ad Loads - Needham
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Needham & Company analyst, Laura Martin, reiterated her Buy rating on shares of Facebook (NASDAQ: FB) and suggests investors use the weakness to take positions. The analyst believes that FB's continuing shift toward "Video first" coupled with its dominant mobile strategic position for advertisers implies that FB's growth will continue to outpace peers and over deliver on estimates.
The analyst is less worried about slowing ad load growth because demand for FB's ad units should drive pricing up faster than ad unit growth slows. FB still has the monetization of FB Messenger and What’s App in front of it, and Instagram stories and FB Live (video) are growing FB's video ad revenue opportunities, as is FB'S build out of Video Home- all of which sell at significant CPM increases, this should drive revenue growth despite slowing ad load growth.
No change to the price target of $150.
Shares of Facebook closed at $127.17 yesterday.
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