Why This Analyst Is Even More Bullish on Facebook Now

Facebook Inc. (NASDAQ: FB) has been on a tear, and Wall Street analysts are trying their best to keep up. The current valuation of Facebook by analysts inspires a few questions relative to other companies. Other queries look inward and ask if this company can sustain the growth seen over the past year.

Citigroup’s Mark May gave an updated call on Thursday after analyzing the most recent F8 Facebook Developer Conference. One of the main points was the incredible revenue growth in video advertising, and the call highlights Instagram or WhatsApp.

In the view of Citigroup, Instagram and WhatsApp could each become billion dollar businesses down the road. In fact, Instagram could deliver over $1 billion or more in ad revenue in 2016 — if Citi is correct. The photo-sharing site is already more active than Twitter by May’s view, but he does not view this at all as a war between Facebook and Twitter Inc. (NYSE: TWTR). May’s opinion is that both companies can win.

As a result of the new views, Citigroup maintained its Buy rating for Facebook and raised its price target to $97 from $91. This implies upside of roughly 18% from current share price.

Facebook has been on fire for the past year, and the social media behemoth’s growth has been more than impressive. The revenue change over the past year was an astounding 54.7%. The consensus price target for the stock continues to climb and now sits at $92.43.

As a reminder, Facebook’s valuation by analysts is challenging Wal-Mart Stores Inc. (NYSE: WMT). If the higher of recent calls made by Piper Jaffray and JMP Securities is correct, then Facebook would be worth roughly the same as Wal-Mart in market value. Facebook’s current market cap is $230 billion and Wal-Mart’s current market cap is $262 billion.

Note that Citigroup and JMP Securities have the same valuation, in terms of a price target. Piper Jaffray had a Buy rating with a price target of $92, implying an upside of just 11.8%.

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Should Facebook be valued the same as Wal-Mart? This may not seem like an apples-to-apples comparison on the surface. Maybe it isn’t. Still, what are investors supposed to think when major economic fixtures and powerhouses are valued the same as social media?

Shares of Facebook were up 0.5% to $82.10 in midday trading on Thursday, in a 52-week trading range of $54.66 to $86.07.