UPDATE: Stifel Nicolaus Sees Catalysts in Facebook (FB), Upgrades to Buy

June 10, 2013 7:57 AM EDT
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Price: $127.04 -0.4%

Rating Summary:
    49 Buy, 8 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 30 | Down: 30 | New: 23
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(Updated - June 10, 2013 8:53 AM EDT)

Stifel Nicolaus upgraded Facebook (NASDAQ: FB) from Hold to Buy with a price target of $29. Analyst Jordan E. Rohan thinks investors are already discounting fears about declining engagement and poor ad efficacy. In addition, he sees upside from a number of catalysts, including inclusion into the S&P 500, back-to-school seasonality, monetization of Instagram, and new products and advertising formats.

"Facebook has been public for a little over a year now and with a market cap of nearly $60 billion, it is likely to be considered for inclusion in the S&P 500 in the next year. Case in point: Google went public in August 2004 and was added to the S&P 500 in March 2006, approximately 18 months after its IPO. At today's valuations, FB would be the 59th largest company in the S&P 500 index," said Rohan.

Rohan believes Facebook could get a boost from seasonal trends in the second half of the year.

"We believe upside is possible in 2Q as desktop revenues enjoy a seasonal spike and the potential for upside to our $1.4 billion in advertising revenues is possible . . . At the end of the day, when the company reports in late July, many investors will be embracing back-to-school and holiday trades, of which Facebook is one of the best. So even if the company reports only in-line numbers, the pessimism is likely to abate quickly as students return to school in August," added the analyst.

For an analyst ratings summary and ratings history on Facebook (NASDAQ: FB) click here. For more ratings news on Facebook click here.

Shares of Facebook closed at $23.29 yesterday.

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