Axiom's Anthony Is Convinced Of Longer-Term Potential For Facebook's Oculus Rift

Many experts, at first, were unsure of the validity behind Facebook Inc (NASDAQ: FB)'s strategic argument of acquiring Oculus Rift. The virtual reality company bought by Facebook in March of 2014 was an effort to enhance Facebook’s entertainment, communications and gaming business.

Axiom’s Take

After months of testing, Axiom's Victor Anthony was convinced in the strategic reasoning behind Facebook’s Oculus Rift acquisition

“We are now convinced of the longer-term potential laid out by Mark Zuckerberg in March 2014, when he announced the pricey $2 billion acquisition of Oculus VR — that is, virtual reality is likely to be the next major computing and social platform, and there is financial and strategic upside to Facebook beyond gaming, notably communications and entertainment.”

Related Link: Facebook Begins Taking Pre-Orders For Oculus Rift From Europeans, Canadians

Raising Unit Sale Estimates

The analyst raised his Oculus unit sales estimate from 500,000 to 800,000 as a result of the pre-order announcement set to ship on September 20 to the U.K., France, Germany and Canada. Overall, there are about 250 million gamers worldwide, according to Axiom.

Anthony believes gaming would be the first market Oculus Rift would disrupt, followed by sports, concerts and video entertainment. Other potential uses the analyst noted included law enforcement, the military and healthcare.

Concerns That Could Limit Widespread Adoption

The system requirements for Oculus Rift are rare among the gaming community and are currently expensive. Even those who have powerful enough computers need to purchase special graphics and memory cards to accommodate the headsets, according to Anthony.

“The average selling price of the headsets is expected to decline, based on historical price declines in other new technologies, but the extent and the timing are uncertain,” stated the analyst.

Cyber sickness also poses a threat. Although it’s gotten better, Anthony continues to hear complaints after extended use. Additionally, competition is on the rise, added the analyst.

According to TipRanks, Victor Anthony has a 67 percent success rating and a +13.1 percent average return per recommendation. The analyst has a Buy rating and $160.00 price target on Facebook.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!