In a strong vote of confidence despite considerable “headwinds,” a major Wall Street equities firm this morning upgraded Facebook’s stock to “outperform” from “market perform.”
“We may be early if financial impact is greater than modeled, but either way, we think this acts as a “clearing event” for the broader issue,” BMO Capital Markets analyst Dan Salmon writes in an update sent to investors this morning.
Salmon said he made the upgrade despite two significant headwinds -- Apple’s rollout of app-tracking transparency steps expected to reduce Facebook’s revenues, as well as increased antitrust prospects -- because those threats are “baked in” to the social network’s current valuation, and because of the upside of the company’s plans to vertically integrate ecommerce across its platforms, including messaging app WhatsApp.
“We are increasing our estimates owing to an acceleration in ecommerce adoption that is fueling robust digital ad spending, which we expect to persist beyond COVID-19,” Salmon added. “We remain slightly below consensus for 2021 owing to targeting headwinds, however, we move ahead in 2022 and 2023 as we expect Facebook’s's native commerce capabilities to transform its surfaces into a digital shopping mall which should support greater than 20% revenue growth over the next several years.”