Facebook’s “graph search” tool, rolled out on Tuesday, lets its more than 1 billion users trawl their network of friends to find everything from restaurants to movie recommendations and is the company’s biggest foray into online search.
Graph search contains some category suggestions that can be easily monetized, BofA Merrill Lynch analysts said in a note.
“It should be easy to incorporate commercial search results via Facebook’s partnership with Bing,” they added.
Facebook currently has a partnership with Microsoft Corp, whose Bing search engine provides search results for external websites. Microsoft also integrates certain Facebook results into its Bing search results.
BofA Merrill Lynch analysts estimated Facebook could add $500 million in annual revenue if it can generate just one paid click per user per year, and raised its price target on the stock by $4 to $35.
Facebook’s shares were flat at $30.10 in early trading on Wednesday. They have jumped about 50 percent since November to Tuesday’s close after months of weakness following its bungled Nasdaq listing in May.
However, analysts at JP Morgan Securities said the lack of a timeline for the possible launch of graph search on mobile devices may weigh on the tool’s prospects.
The success of the graph search, which will rely heavily on local information, depends on Facebook launching a mobile product, the analysts said. Half of all searches on mobile devices seek local information, according to Google.
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