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Facebook Inc (FB) Steps Deeper into Virtual Reality: Analysts Optimistic

By Austin Angelo 

Last week, Oculus, the virtual reality unit of Facebook Inc (NASDAQ:FB), held its second developer conference. One of the highlights of the conference was Facebook’s plan to make virtual reality available to the average consumer, as opposed to reserving it for the techy savvy. Through its virtual reality headsets, Oculus will sell video games, movies and streaming services. Facebook has already partnered with leading names like 21st Century Fox Inc., Lions Gate Entertainment Corp. Twitch Interactive Inc., Netflix Inc. and Hulu Inc. for content. On September 25th, Gene Munster from Piper Jaffray weighed in on Facebook based on these developments.

According to The Fly, Munster anticipates increased momentum for Facebook’s virtual reality theme thanks to a 50% reduction in the prices of Oculus’ mobile VR solution headset (the headset will now be available for $99). Facebook also announced that the Gear VR headset will now work with five phones as opposed to three. As per Munster, given these changes, an improved virtual reality experience is now available to a much broader market. Also there’s growth in “critically important” content given the partnerships with leading content providers.

Munster expects Samsung to sell between 5 million and 10 million Oculus-enabled Gear VR headsets in the next year as compared to 1 million units sold in 2015. And Oculus Rift, the virtual reality head-mounted display, will be sold for $399, similar to the price of Sony PlayStation VR.

Munster says, “Oculus has an inherent advantage with Facebook’s user base and deep products.” He adds, “The launch delay by HTC for HTC Vive is costly for that company because they really needed to get out in front of Oculus and build out some momentum. Now the momentum is with Oculus Rift.”

Munster maintained an Overweight rating for Facebook with a price target of $146. Munster’s price target is somewhat higher the average price target of $112.86 set by 39 analysts polled by TipRanks who have rated the stock in the last three months. Of these 39 analysts, 37 of them are bullish on Facebook while 2 recommend Hold.

Gene Munster has rated Facebook 27 times since 2012, earning an 85% success rate recommending the stock with a +37.5% average return per rating.