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Citing higher expectations of revenue growth from video ads and Instagram ads at Facebook ( FB ), Rosenblatt Securities on Tuesday reiterated its buy rating on the social networking leader. Rosenblatt analyst Martin Pyykkonen also maintained a price target of 125 on Facebook stock, which was down 1%, near 106, in midday trading on the stock market today . Facebook is off 10% from its all-time high of 117.59, set on Feb. 2. Facebook’s revenue-growth visibility should increase this year, Pyykkonen wrote in his research note. By year-end, he estimates, Instagram will account for about $1 billion in revenue, or about 10% of Facebook’s total revenue. He says that Facebook will also benefit long term from growth for its Oculus Rift virtual-reality headset business. “Facebook is introducing better analytics and measurement guidelines for advertisers, which we think is a healthy and natural evolution in the business to drive higher return on investment for large brand and performance-based advertisers,” Pyykkonen wrote. “Our positive outlook for video ads across Facebook’s core platform (and increasingly on Instagram with the wider upcoming ad-selling rollout) is based mostly on volume growth.” This month, Facebook doubled the length of video ads on Instagram to 60 seconds. Many Virtual-Reality Rivals For Facebook Pyykkonen also says that Facebook’s virtual-reality business is broader than just the high-end gaming market. He sees Facebook’s Oculus Rift headset and controllers as positioned for the mass market. Facebook this month said that PCs optimized for its Oculus Rift headset are around the corner . Alphabet ( GOOGL ), meanwhile, is working on VR eyewear through its Google Glass platform. Alphabet already offers a virtual-reality experience through its Cardboard VR headset, designed mainly as a companion for YouTube videos. Apple ( AAPL ), too, is getting its VR game primed via acquisitions, most recently of Flyby Media, an image-recognition company. Apple has not yet announced a VR device, but it has filed a patent for a head-mounted display apparatus. Microsoft ( MSFT ) also is pursuing virtual reality with its HoloLens headset. Microsoft HoloLens enables holographic computing that can be used for applications from creating movie creatures to designing cars. Facebook last week continued to show that it’s king of social media, posting fourth-quarter earnings that soundly beat expectations on booming mobile ad revenue. Facebook reported ad revenue of $5.84 billion, up 52% from Q4 2014. And mobile advertising revenue shot up 69%, accounting for 80% of total ad revenue. It marked Facebook’s strongest revenue growth in five quarters. Scalper1 News
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