Axiom Offers 'Thoughts On China, Messenger Payments,' As Relates To Facebook

In a report published Thursday, Axiom analyst Victor Anthony argued that Facebook Inc's (NASDAQ: FB) entry into China is a matter of when, not if. However, the analyst believes that entry into the world's most populous nation with the world's most Internet users is a longer-term catalyst rather than a near-term one.

Anthony said that based on the China Internet Network Information Center, there are approximately 640 million users in the country – more than double the entire U.S. population. With an Internet penetration rate of 45.8 percent and an assumption that Facebook can penetrate only 30 percent of the Internet population over time, this would add an incremental $2.73 to $3.42 per share of value.

Anthony also commented on Facebook's announcement that it will offer payment solutions over Messenger.

"Facebook has made good on its decision to hire the former head of PayPal David Marcus by adding the ability to send and receive payments on Messenger," Anthony wrote. "The peer-to-peer service is free for now, but we expect that this is the first step in what could be a bigger attempt at getting deeper into mobile payments with Messenger, WhatsApp, and Instagram."

Anthony added that Facebook could also offer payments via credit cards and peer-to-peer services in International markets, especially in developing markets were the consumer value proposition would be bigger.

Finally, the analyst suggested that Facebook is in the early stages of what will be a "more entranced role" for Facebook in payments, meaning eBay Inc's (NASDAQ: EBAY) is "at risk."

Shares of Facebook are Buy rated with a $105 price target.