Here's Why Facebook Inc. Shares Could Pop 25%

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Facebook  (NASDAQ: FB  ) rose 1% in premarket trading Thursday after Evercore Partners upgraded the social networking giant from equal weight to overweight.

So what: Along with the upgrade, analyst Ken Sena raised his price target to $75 (from $69), representing about 24% worth of upside to yesterday's close. So while momentum traders might be turned off by Facebook's price pullback in recent months, Sena's call could reflect a sense on Wall Street that its growth prospects are now too cheap to pass up.

Now what: According to Evercore, Facebook's risk/reward trade-off is rather attractive at this point. "The upgrade considers the recent pull-back (in spite of an exceptionally strong quarterly result) and new work on FB's mobile ad networking initiative (FB Audience Network), which this report explores," said Sena. "In a nutshell, FB now monetizes mobile time spent to the tune of 9:1 the industry (x-Search) which supports the notion that FB can meaningfully increase the size of the mobile advertising pie (versus just taking share)." When you couple those prospects with Facebook's cash-rich balance sheet and still-reasonable PEG of 1.1, it's tough to disagree with Evercore's upgrade. 

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Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

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