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Following Meta Platforms’ (NASDAQ:META) earnings release after the close on Wednesday, Wall Street analysts are sounding a more positive tone on the stock, with price targets being lifted and BofA and Rosenblatt Securities upgrading the company’s shares to Buy.
Meta shares are up more than 19% premarket.
BofA upgraded the tech giant’s shares to Buy from Neutral, raising the price target to $200 from $160 per share. Analysts told investors in a research note that a big change in positioning can drive multiple expansion.
The firm has been cautious on the ad environment into 2023 and on Meta, given the platform shift to Reels and CapEx spending that could derail EPS growth when the ad market improves.
However, U.S. ad revenues “accelerated” in Q4, and the firm sees three drivers that could lead to ongoing multiple expansion for Meta shares.
These three drivers include the stock now being positioned for leverage and EPS upside given the new efficiency mentality, the competitive environment improving, and data suggesting Meta “could become a play” on a multi-year AI/ML improvement cycle.
“We still see recession risk for online ad spend, but as the sector already experienced decline in 2022, we don’t see elevated risk vs S&P. Other risks include regulatory changes, Apple virtual reality competition, and competition from TikTok,” wrote analysts.
Meanwhile, at Rosenblatt Securities, Meta was lifted to Buy from Neutral, with the firm’s price target lifted to $220 from $104.
Analysts said in his note that “4Q22 was in-line, but Meta stoked excitement with cost controls.”
“Meta’s 4Q22 sales of $32.2B fell 4.5% Y/Y (or rose 2% ex f/x), coming near the high end of guidance for $30B to $32.5B. The guide for 1Q23 is -7% to + 2% reported, with a 2 pctg pt f/x headwind. We had been modeling -7% with a 7 pctg pt f/x headwind, so this is better than we had expected,” the analysts explained.
