Piper Jaffray Predicts Upside on Facebook Inc Driven By VR Theme

By Carly Forster

Social media giant Facebook Inc (NASDAQ:FB) has been investing heavily in many different businesses and projects in an effort to increase future growth. One of the company’s Facebook acquired was Oculus Rift, a virtual reality company. Facebook acquired Oculus for $2 billion.

Piper Jaffray analyst Gene Munster weighed in on Facebook on August 18 with the belief that Facebook will be positively impacted by the VR theme over the next three months. As such, the analyst maintains an Overweight rating on Facebook with a $146 price target.

Munster lists three main reasons as to why he thinks the VR theme will boost Facebook shares. The first reason is that “in September Oculus will host a developer conference in LA (Oculus Connect 2) which will address investor questions around the VR use case.” Munster sees the conference as an opportunity for Oculus to “answer one of the biggest questions investors have around VR which is: what are VR’s use cases?” Additionally, the company “will also announce details of their next version of Gear VR (phone driven VR), which was revealed by Oculus’ CTO’s Twitter Account last week.”  Munster also anticipates that Oculus “will announce the launch date for the Oculus Rift.”

The second reason Munster names is his belief that “the consumer version of Oculus (Rift), will be available slightly earlier than investors expect with sales starting in January of next year.” The analyst notes that “Buyside expectations for the Oculus Rift launch are for the second half of Q1 2016, but our industry sources point to the first half of Q1 2016 with pre-orders potentially starting holiday 2015.” Munster claims the extra few weeks “gets Oculus to market in time to take orders for holiday and also compete with the HTC Vive, which is expected to launch in December 2015.”

The final reason Munster lists for why VR will boost Facebook is his “analysis of VR headcount through LinkedIn suggests Facebook is making the most aggressive investment in VR talent which increases our confidence in Facebook’s long term VR position.” The analyst notes that for the “Long term, we believe Oculus has set itself up nicely to be an industry leader with acquisitions of 13th Lab, Nimble VR, Surreal Vision and Pebbles Interfaces. These acquisitions are included in the overall Oculus headcount numbers.”

On average, Gene Munster has a 64% success rate recommending stocks and a +23.5% average return per recommendation when measured over a one-year horizon and no benchmark. He has rated Facebook 24 times since 2009, earning a +42.8% average return per recommendation.

Out of 38 analysts polled by TipRanks, 35 analysts are bullish on Facebook, 2 are neutral, and 1 is bearish. The average 12-month price target for Facebook is $110.47, marking a 17.61% potential upside from where the stock last closed. On average, the all-analyst consensus for Facebook is Strong Buy.

Image Credit

Previous articleAbbVie: The Riskiest Dividend Aristocrat
Next articleMixed Messages For US Housing Activity In July
Hey, Im Joshua, the founder of CNA Finance. I enjoy following the trends in the market and finding the catalysts that are making the moves. If you want to get in contact with me, leave a comment below or email me at CNAFinanceHelp@gmail.com Please keep in mind that I am not an investment advisor and nor is CNA Finance. This is a news and information gathering outlet. We may work directly with some of the companies that we write about. If we have a business relationship with an issuer, we will mention that in the articles. We also have various affiliate relationships with advertisers and may be paid if you sign up for a service that you were referred to through our website.


Please enter your comment!
Please enter your name here