Aegis Capital analyst Victor Anthony said Facebook (NASDAQ: FB) is clearly open to a paid service with no ads and sees pricing in the range of $3-$5 as plausible. The analyst reiterated a Buy rating and price target of $215.

Analyst Victor Anthony comments "We were skeptical of Mark Zuckerberg's ability to withstand an onslaught of questioning from the lawmakers yesterday, but he was poised, mostly firm in his responses, and exuded confidence. He did well. As he gears up for another round of questioning in a few moments today, we point to a few key takeaways from yesterday: 1) the process with lawmakers will be ongoing and will be headline risk for the stock for sometime. The reality is that Facebook will continually face bad actors looking to exploit the platform, so issues of privacy will likely continue indefinitely; 2) Based on TV interviews with senators afterwards, we do think that some form of regulation on the online media sector is forthcoming. However, the questions from the senators were not adversarial, leading us to believe that legislation is unlikely to be heavy-handed and damage Facebook's business model; 3) It appears that Facebook (& some senators) is open to regulation in the U.S. similar to GDPR (General Data Protection Regulation); and 4) Facebook is clearly open to a paid service with no ads. A paid service would need to include media content similar to Netflix rather than short-form content to be attractive, in our view. Pricing in the range of $3 to $5 per month looks plausible."

While the analyst believes concerns brought about from the Cambridge Analytica crisis will linger for some time, they do see the pullback in the shares as a buying opportunity based on:

1. Facebook is unlikely to so see an exodus on users from the platform. Most users of Facebook simply do not
care about the ongoing crisis;

2) Thus far, with the exception of a few advertisers who went public with their intention to pull ads off Facebook, we believe advertiser loss will be marginal.

3) Data we have seen shows that Instagram use continues to grow unabated and ad loads continue to increase.

4) It bears repeating that Facebook has two under-monetized assets in Messenger and WhatsApp, both of which could be billion dollar revenue opportunities within a short period of time.

5) On our recently reduced estimates, which assume EBITDA grows at a 20% CAGR ('17-'20), Facebook trades at 10x '19 EBITDA.

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 $165.04 yesterday.