Pivotal Research lowered its rating on the internet company to sell from hold, saying it is facing digital ad saturation risk as large companies are "scrutinizing" their marketing budgets.
"We think that the market is looking at upside potential without appropriately considering risks to growth," analyst Brian Wieser wrote in a note to clients Friday. "With every passing year, digital advertising is closer to a point where the market is saturated."
Facebook has been one of the best-performing large-cap stocks in the market. Its shares rallied 49.9 percent year to date through Friday versus the S&P 500's 10.4 percent return.
Conditions around Facebook "have gotten worse. You have political macro uncertainty. That's not good for them. You have increasing problems with view-ability that marketers were mostly not aware of at all last year," Wieser said on CNBC's "Halftime Report" Monday.
View-ability refers to how many consumers actually read or view internet ads.
"I don't think most large marketers are aware of this," he added.
The analyst reaffirmed his year-end $140 price target for the company, representing 19 percent downside from Friday's close.
Wieser reduced his rating on Facebook shares to a hold from buy on Feb. 1. Facebook shares have rallied 29.4 percent since his earlier downgrade.
The analyst cited how large company advertisers represented 30 percent of Facebook's sales. He noted how P&G recently cut $140 million in its digital ad budget and said it had no impact on its revenue.
P&G's "statement will undoubtedly add fuel to the fire of large brands more carefully scrutinizing their digital advertising choices," he wrote. "There are limits to growth to spending on advertising, as marketers are mostly unable to tap into broader and generally segregated marketing budgets."
Only one other Wall Street analyst out of 40 has a sell or underweight rating on Facebook, according to FactSet through Friday.
Facebook did not immediately respond to a request for comment. Its stock price was down nearly 2 percent in midday trading Monday.
— CNBC's Michael Bloom contributed to this story.