Analysts at Facebook’s lead underwriter, Morgan Stanley, have set a price target of $38 on newly-public Facebook’s stock — just weeks after the Wall Street giant’s investment bankers took the social network public at that price. Morgan Stanley’s price target, released along with scores of other reports now that the Facebook analyst quiet period has ended, is noteworthy because it implies that the bank’s analysts see no upside to Facebook stock — beyond the IPO price — over the next year, despite expressing cautious optimism and a “overweight” rating.
Analysts at Facebook’s underwriters were required to wait 40 calendar days before publishing their first reports on the social networking giant.
“We view Facebook as a valuable long-term asset that has been penalized by a negative perception of its ability to navigate a transition to mobile usage,” Morgan Stanley analysts wrote in their 90-page report, issued early Wednesday morning. “We view Facebook’s mobile transition as a near-term headwind but long-term opportunity, and investors that believe in Facebook’s ability to execute over the next several years may be rewarded when the mobile monetization gap (between time spent and ad spend, currently at 10% vs. 1% per eMarketer) narrows or closes.”
(The mobile monetization gap refers to the difference between the percentage of time people people spend on Facebook using mobile devices, 10%, and the percentage of spending directed toward Facebook mobile ads, 1%.)
According to the average analyst estimate compiled by Bloomberg, Facebook shares “will increase to $37.95 over the next year, 5 cents less than the initial price set when shares began trading in May.”
JPMorgan, another lead Facebook underwriter, initiated coverage with an “overweight” rating and a $45 12-month price target.
“As the underlying social fabric of the Web, Facebook is a unique platform asset with strong network effects, a deep competitive moat, and unparalleled social context,” JPMorgan analysts wrote. “We believe the next phase of the Internet will be driven by data and powered by ubiquitous online access, and Facebook is well positioned here through its large and engaged user base, virtual ownership of the social graph, and unwavering focus on the user experience.”
Here’s a selection of other newly-released analyst reports on Facebook, via The Wall Street Journal. Facebook stock traded early Wednesday at $32.05, down 3% from the previous day’s close, and 13.5% below the IPO opening price.
- Goldman Sachs, also a lead underwriter, initiated coverage with a “buy” rating and a $42 12-month price target.
- RBC Capital Markets launched its coverage with an “outperform” rating and a $40 price target.
- Bank of America Merrill Lynch came in with a “neutral” rating, and $38 price target.
- Citigroup was also “neutral,” with a $35 price target.
- Barclays started its coverage with an “equal weight” rating and a $35 price target.