Instagram's Worth $33 Billion, Making Facebook (FB) Cheap on SOTP Basis - Cowen

Facebook (NASDAQ: FB) is modestly higher Thursday (+1%), driven in part by bullish comments from Cowen analyst John Blackledge. The analyst highlighted the company's fast-growing Instagram service and sees upside based on a sum-of-the-parts valuation.

"Instagram is a valuable asset for FB given its large, fast-growing and highly engaged user base that's drawing significant advertiser interest per our recent social user and ad buyer surveys," Blackledge commented. The analyst sees Instagram MAUs more than doubling to 680 million by 2020, which he said could prove conservative. Also Instagram users skew young (72% are 18-44), with females totaling 65% of users.

The analyst estimates Intagram's enterprise value is $33 billion, which when added to Facebook's other assets, makes the stock cheap.

The firm's SOTP analysis suggests 23-36% upside to Facebook. "Our FB SOTP analysis suggests FB-Standalone enterprise value (EV) is $140BN, which appears low to us and is derived by FB’s current EV of $206BN less (i) Instagram’s EV of ~$33BN based on a 10% EV/MAU discount to TWTR despite Instagram’s higher & faster growing users, (ii) WhatsApp EV of $22BN (acq. price) and (iii) FB Messenger EV of ~$10.5BN (500MM MAUs)."

The firm reiterated an Outperform rating and price target of $91 on FB.

For an analyst ratings summary and ratings history on Facebook click here. For more ratings news on Facebook click here.

Shares of Facebook closed at $76.71 yesterday.

You May Also Be Interested In

• Teradyne (TER) PT Raised to $125 at TD Cowen
• TechnipFMC (FTI) PT Raised to $30 at BTIG
• Midday movers: Meta, IBM, Caterpillar fall; Chipotle rises