If there is one thing that is usually a given in technology, it is that it is hard to stay on top once you get there, regardless of how powerful your franchise is. The incredible reality is there are two technology titans that are obliterating the competition and are really pulling away from the pack. A new research note from Cowen highlights the strength and gains from these two companies, and both are rated Outperform.
Last week the Cowen team hosted a dinner during the Internet Retail Conference and Exhibition (IRCE) in coordination with the EliteSEM search agency and several of its partners, including Kenshoo and Custora. The executives from these top companies were apparently able to really highlight to the analysts the big gains being made in social media advertising and search budgets.
This incredible, fast-growing company remains the face of social media, and a challenger seems nowhere in sight. Facebook Inc. (NASDAQ: FB) has been grinding higher over the past year after a big run up in 2013 to early 2014, when the stock almost doubled, and the social media behemoth doesn’t look to be slowing down. The revenue change over the past year was an astounding 54.69%, and it comes in as a top Internet stock pick at Cowen.
With Instagram, premium video and Graph Search capabilities, some analysts feel that the company can drive revenue growth even without a huge increase in advertising placement. The Cowen teams thinks investor sentiment is very positive and that mobile advertising growth via different silos can be added this year, in 2016 and beyond. They also reported that Instagram is opening its platform for advertisers, particularly direct response advertisers via new direct response ad units like mobile app install ads. With Facebook’s talented and experienced sales team, this should only continue to drive revenue higher.
Kenshoo is a Facebook Marketing Partner that has somewhere between $5 billion and $6 billion in direct response advertising spending running through its platform. The Cowen report suggested that based on conversations, social ad spending on the company’s platform was up a staggering 100% year over year. Furthermore, Facebook continues to capture a larger share of its clients’ digital advertising budgets, in part driven by Facebook video, which is the fastest growing segment, according to Kenshoo.
The Cowen price target for the stock is $94. The Thomson/First Call consensus price target is a touch higher at $95.57. The stock closed on Friday at $82.14.