The advertising revenue outlook at Facebook (FB) and Twitter (TWTR) is looking up, according to a new report by equity research firm Pivotal Research Group.
Pivotal analyst Brian Wieser on Wednesday raised his price target on Facebook to 81 from 74 and on Twitter to 37 from 34. He rates Facebook stock a buy and Twitter a hold.
Facebook stock was up 3% in afternoon trading in the stock market today, near 65. Twitter stock was up more than 2%, near 38. Facebook ranks No. 5 in Wednesday's midweek update of the IBD 50 listing of top-performing stocks, it broke out at 66.57 last month.
"Facebook remains our preferred stock within the (Internet advertising) sector," Wieser said. He revised his targets higher for Facebook sales and earnings this year and beyond, "driven by faster-than-previously forecast revenue growth from several different ad products and market segments.
"Many factors are at play, including app installs, ongoing focus on selling ads to small and medium-sized enterprises, international growth, Instagram, a mobile ad network and a larger share of digital budgets that would otherwise have gone to online video (not via TV dollars per se, but now via the LiveRail acquisition just announced earlier this month)," he said.
As for Twitter, many investors are too focused on user growth figures, Wieser said.
"The likelihood of Twitter becoming universally appealing seems small, but the very large existing user base and the medium's unique attributes mean there is real revenue to be generated from the core platform," he wrote.
Wieser maintained his hold rating on Yahoo (YHOO) stock with a price target of 38. But he trimmed his price target on Google (GOOGL) to 560 from 570, while maintaining a hold rating.
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