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converted to Wall Street after CEO Mark Zuckerberg's 3,000-word manifesto on privacy and messaging initiation.
Nomura Instinet upgraded Facebook shares (ticker: FB) to switch from Neutral and raised its price target from $ 172 to $ 215, in a research note on Monday. Facebook shares rose 2.5% to $ 173.78 early in the session.
The importance given to the private messaging of WhatsApp, Instagram and Facebook Messenger, as reported in Zuckerberg's Wednesday article on the blog, suggests that "the engagement could improve if the company seeks to focus on encrypted and ephemeral email between properties, "Nomura Analyst Mark Kelley says in the note.
Several analysts, including ForresterS Thomas Husson, predict that Facebook is creating a new business model with private messaging, leading to secure transactions. Almost all of Facebook's $ 56 billion in revenue last year came from advertising sold on news feeds and other public publications.
Kelley, an analyst at Nomura, also praised the faster adoption of Facebook stories by consumers, a feature that allows users to upload collections of photos or videos to their profile. It was created almost two years ago.
"We based our downgrade of FB shares on Neutral last year on our view that the move to Stories would take longer than expected upwards," wrote Kelley. "However, as we have heard at industry events early in the year and our own conversations, the transition seems to be happening faster than expected, which has soothed our worries. "
Another potential concern, regulation, does not seem to bother him, despite proclamations such as President Elizabeth Warren's campaign commitment to break Facebook,
Amazon.com
(ticker: AMZN), and
Alphabet
S
(GOOG) Google.
"We continue to think that stronger regulation will be a net benefit for large platforms such as FB, even though there could be a major risk in the short and medium term," wrote Kelley. "Overall, we think the headwinds have been largely exhausted, with little negative press reaction lately."
Facebook shares have risen 29% this year, but have fallen 8% in the past 12 months due to lingering concerns over increased privacy regulation.
Write to Jon Swartz at [email protected]
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