Why Investors Will 'Have to Buy' Facebook: Analyst

Facebook could be one of the "most compelling investments in the Internet sector right now," according to Stifel Nicolaus analyst Jordan Rohan, who sparked a rally in the company's shares on Monday by raising his rating from "hold" to "buy."

Rohan spoke to CNBC's "Squawk on the Street" about his call, which includes a price target of $29.

Compared to Google, "Facebook is growing faster, there are fewer believers in the long-term story so the sentiment is quite negative," Rohan said.

(Click here to see where Facebook shares are trading now.)

The bears on the stock either believe Facebook ads don't work or that engagement is declining as younger demographic is leaving the service, Rohan said. However, he believes several catalysts in the next 12 months will create a situation where investors will "have to buy the shares."

These negatives have already been factored into the share price while the positives have been ignored, he said.

(Related: Google Close to Buying Waze for $1.3 Billion: Report)

Rohan said he expects Facebook's July numbers will be better than those predicted on the Street. His list of positive catalysts also include a potential addition to the S&P 500 index, a seasonal bump from an increase in back-to-school advertising and monetization of Instagram.

Back-to-school seasonality is important for the stock because the company's roots are in college campuses, and advertisers will look to Facebook for their campaigns, he said.

(Related: Data-Driven Tech Industry Is Shaken by Online Privacy Fears)

"This is the preponderance of news flow over the next six months for Facebook. The stock is going to be positive," he said.

—By CNBC's Paul Toscano. Follow him on Twitter and get the latest stories from "Squawk on the Street" @ToscanoPaul.