Facebook Inc Is a Goldman Sachs “Focus” Stock (FB)

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Goldman Sachs added Facebook Inc (NASDAQ:FB) to its so-called Focus List, bolstering the firm’s bullishness on FB stock as an investment opportunity. It was largely buried by the much bigger story regarding Facebook last week — the row between the social networking platform and an author that had a picture removed from his Facebook page last month because it didn’t comply with the company’s rules for posted images.

FB Stock: Facebook Is a Buy With or Without Goldman Sachs' Award

Is the Goldman Sachs award a reason to buy FB stock? Sure … not that other reasons aren’t already good enough on their own. What’s so surprising is that it took as long as it did for Goldman Sachs to recognize just how rock-solid Facebook is.

Not New Bullishness for FB

Just for the sake of clarification, Goldman Sachs was already bullish on Facebook prior to adding this accolade. In late July, Goldman reiterated its “buy” rating on the stock as it was raising its price target on FB stock from $142 to $162.

Pegging FB to the company’s Focus List is a way of telling investors that Facebook is worthy of attention more than ratings and a healthy price target might suggest. It simply means it’s a name investors should pay particular attention to, because Goldman Sachs is.

Goldman Sachs analyst Derek R. Bingham explained of his decision: “We believe this industry-leading engagement offers a myriad of ancillary future opportunities in areas such as Messenger app, Facebook M (virtual assistant) and Facebook Login,” pointing out that owners of mobile devices spend 30% of their time every day doing something just on Facebook.

To that end, the company’s mobile advertising division saw an 81% increase in year-over-year ad revenue last quarter, and mobile now accounts for more than 80% of the company’s total revenue.

Bingham also touted Facebook’s impressive active user base of 1.7 billion members.

On the other hand, he didn’t point anything out about FB stock that most everyone — professional and amateur — didn’t already know.

What the Market’s Saying About Facebook

While adding FB stock to the Focus List is something of an upgrade, it’s an upgrade that is a proverbial drop in the bucket. Goldman already liked the company’s upside, as does most everyone else.

As of the most recent look, of the 49 analysts covering FB stock, 27 of them deem it a “buy,” while 17 of them think Facebook is a “strong buy.” The average price target is $154.19. That target price has been steadily getting higher too, in step with — though always a few points ahead of — the actual price of FB shares.

Ratings. Opinions on FB Stock
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There’s little doubt as to the upside of Facebook. There hasn’t been in a while. Not that Goldman Sachs’ new tag isn’t a respectable accolade, but there’s little that can be added to the mix right now that could make the stock any more investment-worthy.

The underlying reason is something yours truly explained here.

Bottom Line for FB Stock

FB stock is worth owning, but no more so specifically because Goldman Sachs has put it in the spotlight. The reason FB is worth owning stems from the simple fact that users still love it, and it’s not only making money hand-over-fist, it’s growing the top and bottom line at a jaw-dropping pace.

This year’s projected revenue of $27.1 billion is 51% better than last year’s $17.9 billion. This year’s projected income of $3.94 per share is leaps and bounds better than last year’s $2.28. Next year’s expected growth looks just as juicy.

Sure, there will come a time when there’s simply no more room for double-digit growth. That time is still rather far down the road though, and Mark Zuckerberg is apt to come up with a handful of new revenue plans between now and then.

It’s surprising that it took Goldman Sachs this long to pull the trigger.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/09/fb-stock-facebook-buy-goldman-sachs-award/.

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