Facebook stock now costs half as much as it did when the company went public in May, and it’s finally worth buying, according Capstone Investment analyst Rory Maher.He just upgraded the stock from “hold” to “buy” and gave it a price target of $26 for 8 reasons.
- He estimates that the stock is trading at about 16X the company’s 2013 EBITDA.
- He says the company’s revenues will grow 36% during the remainder of this year, at a similar rate through 2016.
- He’s not going higher than $26 because he doesn’t think Facebook will invent a new ad unit that takes over the world the way search ads did.
- He says Facebook got a lot more traffic during the Olympics, and that this highlight’s Facebook’s “strength as a media Company.”
- Maher’s software says there was an increase in traffic to brand pages during the past month. For 48 brands, traffic was up 10% month-over-month.
- Worldwide user-growth continues. Maher’s software says it was up 3.5% last month.
- He says Facebook game play is up, even if Facebook’s biggest third-party games are shrinking.
- He says that Facebook serves a different kind of advertiser than Google.