Facebook initiated with an Outperform at Bernstein
Bernstein analyst Mark Shmulik initiated coverage of Facebook with an Outperform rating and $250 price target as part of a broader initiation of the U.S. Internet sector with a generally positive outlook. Shmulik says he expects Facebook's portfolio of apps to continue to capture 70%-80% of new social media users with Instagram nicely supplementing core Blue's slowing growth. He expects Facebook to continue capturing 40%+ of new digital ad dollars on the back of the "rent" for brands selling online, as well as unlocking new ad opportunities within Instagram and Whatsapp. The analyst adds that he thinks regulatory risk is already priced in, and believes Facebook's actual risk is less than perceived, although cost of compliance will weigh on margins and potentially stall the acquisition engine.