NEW YORK — NEW YORK (AP) — A Sterne Agee analyst on Friday boosted his price target for Facebook Inc., saying that the social network is poised to get a boost from its acquisition of Instagram.
Arvind Bhatia increased his price target by $8 to $58 and reaffirmed his "Buy" rating for the stock. He added that overall, things are going better than expected at Facebook.
Instagram, a photo sharing app bought by Facebook last year, said in a blog post late Thursday that it will start showing "occasional" photo and video advertisements in the coming months, marking its first step toward making money.
To ease users into seeing ads, the company it will focus on showing "a small number" of "high-quality photos and videos" from a handful of brands. The app has more than 150 million users and is especially popular with teenagers and young adults.
Bhatia said he thinks Instagram is in a good position to start making money and predicted a slow rollout of ads in 2014, with a pickup following the next year. U.S. users, which account for about 40 percent of Instagram's base, could start seeing advertisements by the end of this year, he said.
In premarket trading, Facebook shares rose 79 cents, or 1.6 percent, to $49.97 about 45 minutes before the market opening. Facebook shares peaked at $51.60 on Sept. 30.