Facebook stock is a "buy," according to some of the world's major investment banks, but others are more cautious.
Their comments were published early Wednesday, as the leading firms on Wall Street and elsewhere were freed for the first time to voice their opinions.
Wednesday marked the end of the Securities and Exchange Commission-mandated "quiet period," the 40 calendar days following the social utility's initial public offering when analysts from the 33 firms that served as managers and co-managers on the IPO were prohibited from publishing recommendations.
Goldman Sachs was quick out of the blocks, initiating its coverage with a "buy" rating, and a $42 12-month price target. Social platforms are helping to usher in the next era of the web, Goldman said, and, given its user base and leading social platform, Facebook is poised to dominate this next phase of the internet, it added.
RBC Capital Markets was of a similar opinion, starting its coverage with an "outperform" rating and a $40 price target.
Facebook is the leading social media destination in the world, with more than 900 million active users and time spent on the site far ahead of any competitor, RBC said. The company's significant value lies in the user data it collects around contributed information, interactions between users, and activity around the web, which can be used for both advertisement targeting as well as to push content to users.
However, despite this optimism, others were wary.
Barclays initiated its coverage with an "equalweight" rating, and a $35 price target. Facebook deserves a premium multiple as it is a market leader in both social media and broader online advertising and operates at margins that are significantly higher than the majority of its competition group, Barclays said.
But, although Barclays is excited by Facebook's long-term opportunity in online advertising, it pointed to significant risks. "Facebook does not derive any meaningful revenue from its increasing mobile usage, and its ability to do so going forward is unproven," it said.
Facebook went public last month, and initially priced its stock at $38 a share. The stock briefly surged to $45 in its first day of trading but quickly surrendered those gains, hitting an intraday low of $25.52 on June 6. The stock closed Tuesday at $33.10.