The stock looks like a good opportunity at these levels. Here’s why you may want to add it to your Buy list now.
Facebook (NASDAQ: FB) made a big announcement this week.
On Tuesday, the social media giant officially threw its hat into the cryptocurrency ring with the announcement of its new digital currency, Libra.
While it’s not expected to launch until 2020, Libra is already backed by 27 partners including eBay (NASDAQ: EBAY), Lyft (NASDAQ: LYFT), Spotify (NYSE: SPOT), and Uber (NYSE: UBER), and Wall Street is already speculating about what this could mean for the company’s bottom line.
On the flip side, the project was immediately met with criticism and policy makers are already gearing up to scrutinize Libra with U.S. lawmakers planning a hearing for next month.
But beyond all the chatter surrounding Facebook’s latest venture, a look at Facebook’s chart points to a larger rally on the horizon.
That’s according to Miller Tabak’s Matt Maley who said, “The chart looks pretty good. Obviously had a horrendous second half of the year last year when it got absolutely clobbered, but it broke above … its six month trend line at the beginning of the year, so that was positive.”
The stock’s recent trading has been “choppy,” according to Maley, who noted that the stock’s ability to stay above $160 in its recent pullbacks points to upcoming upward momentum. Maley now has his eye on $195, which is about 4% higher than where the stock is now.
“If it can break above that, it’s going to be a kind of straight shot up to its all-time highs I think… So the key is even though the stock’s rallied 50% off its low from late last year, it still has double-digit percentage upside potential if it can break above that key $195 resistance level,” Maley said.
ButcherJoseph Asset Management’s Nancy Tengler believes Facebook has made a “smart move” breaking into the cryptocurrency market. She noted that the use of blockchain could assist the company in addressing ongoing privacy concerns and regulatory issues.
“The privacy issues, the governance issues at that company are somewhat troubling to me. But I actually think this was a very clever move,” Tengler said. “We had argued that blockchain would solve some of the privacy problem, just in the market in general, and they’ve basically adapted that technology.”
So far this year, Facebook shares are up 43%. However, the stock is still 16% below its all-time high of $218 after a rough end to 2018.
Tengler says the stock looks “compelling” from a valuation standpoint as the company is “still generating solid growth,” and says the stock is a good buy now.
“Just on the basic business with Instagram monetizing Whatsapp, we think you have to own this stock for the next three to five years,” Tengler said.
There are currently 41 Buy ratings for FB on the Street and analysts’ average price target is $211.41, indicating possible upside of nearly 13% from current prices.