How Facebook Could Overtake Google

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Updated from 11:46 a.m. to include information about new News Feed in the sixth paragraph.

NEW YORK (TheStreet) Facebook isn't just the world's largest social network. It's an advertising behemoth, which may soon wind up rivaling the likes of Google .

UBS analyst Eric Sheridan boosted his price target on Facebook to $90 from $72, noting that fourth-quarter pricing strength has carried over to the first-quarter, and may be more sustainable than previously thought. "Our Q1 advertiser channel checks suggest that the pricing strength exhibited in Q4 (+92% YoY price-per-ad) has carried over into early 2014 and is likely sustainable for longer than our prior estimates had assumed," Sheridan wrote in the report. "In particular, we note the improved quality of advertisers & increased frequency of higher CPM formats (mobile app ads in particular) within the existing ad load."

Sheridan now expects Facebook to generate $11.9 billion in revenue in 2014, up from $11.1 billion, with an Adjusted EBITDA of $7.4 billion and adjusted earnings of $1.25 per share, up from $6.8 billion and $1.27a share, respectively. He also boosted his 2015 estimates, and now expects $16 billion in sales, $10.2 billion in Adjusted EBITDA and $1.80 per share in earnings. Analysts surveyed by Thomson Reuters expect Facebook to generate $11.37 billion in revenue in 2014, earning $1.25 a share, and $14.88 billion and $1.68 in 2015, respectively.

Shares of Facebook were higher in early Monday trading, up 2.8% to $71.74 on the back of the price target boost.

Much of what Facebook has been able to accomplish, particularly as it relates to mobile advertising, is app install ads, which the company launched in October 2012. Now, more than a year later, Facebook has been able to generate 145 million app installations from Google Play and Apple's App Store. The ads appear in Facebook's mobile app on users News Feeds, and helped the company generate $1.24 billion in mobile advertising revenue during the fourth quarter. Google is still trying to garner success with its initiative, which has links inside mobile apps to Google's search results.

The report comes as Facebook recently changed the look of its News Feed. Facebook has redesigned its desktop News Feed to be more streamlined, similar to what it has on mobile.

This comes as Facebook is set to hold F8, its developer conference for developers on April 30, in San Francisco. It's the first F8 conference since 2011, and in it, Facebook intends to help developers with getting started guides, best practices, infrastructure ideas, tips for advertising and ways to monetize the app or game the developer has built.

For the entire fourth quarter, Facebook generated $2.59 billion in sales, as advertising revenue soared 76% year over year to $2.34 billion. That allowed the company to earn 34 cents a share, beating the consensus estimates of 27 cents a share and $2.33 billion in sales.

In comparison, Google generated earnings of $12.01 a share in the fourth quarter on $13.55 billion in revenue, but the company noted cost-per-click, a key advertising metric, fell 11% year-over-year and 2% sequentially. However, paid clicks, which include clicks related to ads served on Google sites and the sites of its Network members, increased approximately 31% over the fourth quarter of 2012, and 13% sequentially.