Here’s Why Facebook May Not Be a Bad Buy

J.P. Morgan delivered some bittersweet news for Facebook (NASDAQ:FB) on Tuesday, cutting its price target on the company’s stock, but still pegging it at about 66 percent higher than what the shares are trading at right now. Analyst Doug Anmuth wrote in a note to investors on Tuesday that Facebook will soon be worth $30 a share, down from the $45 target he made on June 27 while first recommending the stock. However, the social network was trading barely a shade above $18 on Tuesday morning.

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Anmuth put an “overweight” rating on the stock, saying he was not very worried about the millions of shares of the company that are expected to enter the market over the coming months as several lock-ups end.

The analyst also expressed optimism about Facebook’s advertising strategy by raising his ad revenue estimates to $1 billion by the end of 2013. Anmuth calculated that Facebook’s advertisements, including Sponsored Stories, Marketplace ads, and those on the mobile platform, will generate EBITDA of $4.2 billion in 2014. The analyst added that if Facebook were to get back to $30 a share, the stock would trade at the same 15x multiple that investors assign to Amazon (NASDAQ:AMZN).

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