Facebook Snaps Up Customer Service Start-Up Kustomer; Street Sees 17% Upside

Facebook has agreed to buy New York-based software start-up Kustomer to help improve customer services to businesses across multiple channels on its platform. While the social media giant didn’t disclose the financial terms of the deal, Bloomberg has learnt that the transaction value is said to be more than $1 billion.

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Facebook (FB) said in a blog post that “Kustomer is an omnichannel CRM [customer relationship management] platform that brings customer conversations from various channels together into a single-screen view. It helps businesses automate repetitive tasks so their agents can maximize the time and quality of interactions with customers.”

Facebook has already added customer-service tools to its messaging business like WhatsApp and Messenger to help businesses interact with people via chats. The social media giant said “every day more than 175 million people contact businesses via WhatsApp. This number is growing because messaging provides a better overall customer experience and drives sales for businesses.” (See FB stock analysis on TipRanks)

On Nov. 16, J.P. Morgan analyst Doug Anmuth raised stock’s price target to $330 (19.2% upside potential) from $315 and maintained a Buy rating. Anmuth believes that Facebook will continue to benefit from a recovery in the online advertising market.

Like Anmuth, the Street also has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 33 Buys and 2 Holds. The average price target stands at $323.18 and implies upside potential of about 16.7% to current levels. Shares have risen by 34.9% year-to-date.