The words cheap and Facebook rarely share the same sentence. Shares of the social giant sport a PE near 80, and at $220 billion, its market cap over twice that of Boeing. But according to one top strategist, there is one measure that suggests the social giant could in fact be a bargain, and if she is right, Facebook investors could soon see new all-time highs in the coming months.
On CNBC's "Trading Nation," options expert Stacey Gilbert pointed to a growing disconnect between how analysts and investors are valuing Facebook as one reason to be bullish on the stock. Specifically, she noted that Facebook shares are trading at an 18 percent discount to the average analyst price target.
"Believe it or not, that's one of the biggest discounts we've seen in the past year in terms of where Facebook shares have closed versus the average price target," Gilbert, head of derivative strategy for Susquehanna said on Monday. According to FactSet, 88 percent of the 48 analysts who cover Facebook have a positive rating on the stock, with the average price target of $95.88. By Gilbert's work, Facebook's discount to its average price target is among the highest in the S&P 500, which she says is surprising given the company's high valuation.
"The sentiment on the Street is relatively positive," said Gilbert.