Citi analyst Jason Bazinet raised the firm's price target on Facebook (FB) to $275 from $245 and keeps a Buy rating on the shares. The stock closed Tuesday down $2.71 to $232.20.

With last week's launch of Shop, Facebook is enabling consumers to purchase items directly within the Facebook or Instagram app, Bazinet tells investors in a research note. Facebook will likely generate revenue in two ways from Shop as retailers will be more likely to advertise as e-commerce functionality is built into the social media platform, and secondly, retailers will typically pay a 5% fee on retail sales conducted through Shop, says the analyst.

Bazinet believes there is scope for Facebook's equity to appreciate further if Shop is successful.