Facebook's new search tool has strong potential to generate revenue for the social networking company, though it is unlikely to challenge Google as the world's dominant search engine, Wall Street analysts claim.
Facebook's "graph search" tool, rolled out this week, let one 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 monetised, BofA Merrill Lynch analysts said.
"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 $500m (e380m) 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 (e 22.64) in early trading yesterday.
They have jumped about 50pc since November to Tuesday's close after months of weakness following its bungled Nasdaq listing in May last year.
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.
Graph search also lacks the depth of review content of Yelp Inc, the analysts added.
Pivotal Research Group analyst Brian Wieser said monetisation potential would be largely determined by Facebook's ability to generate a significant portion of search query share volumes and he expects that quantity to be relatively low.
"Consumers are likely to continue prioritising other sources, ie Google.
"Advertisers would consequently only use search if they can, or are perceived to, satisfy their goals efficiently with Facebook," Mr Wieser said.