Meta Platforms (NASDAQ:META)
Following an upgrade to Buy at Loop Capital, which was “increasingly positive” on revenues, Meta Platforms stock (NASDAQ:META) was trading 2% higher on Monday morning even if key Communications rivals were trading down.
Even though Meta stock has seen an “outstanding” re-rate this year, with gains of 94% year-to-date compared to the wider market’s gains of 8%, analysts Rob Sanderson and Alan Gould are optimistic about the company’s future revenue prospects.
According to the analysts’ assessment, “three significant headwinds to revenue (Apple ad tracking changes, foreign exchange, and the transition to Reels) are all cycling through and set to become tailwinds.” According to them, when all of these factors are considered together, the result is a headwind to revenue growth in the mid-teens percentage range.
And a significant portion of the stock’s revaluation has been attributed to profit revisions linked to the company’s aggressive approach to spending. Since the end of January, consensus earnings per share for 2024 have increased by 44%, while sales have only been a 3% adjustment.
The analysts note that “Meta’s product story is as good as it’s been in some time,” with enthusiasm for Advantage+ “for a good reason.” Several other ad-tech improvements helping reverse the headwind from Apple’s iOS privacy changes. Aside from the disappearance of $15 billion in revenue headwinds from the previous year, this year, “Meta’s product story is as good as it’s been in some time,” they say.
Meanwhile, the company has a more optimistic outlook on the influence of the short-form video product Reels on revenue.
“Meta has repeatedly shown to be a terrific fast-follower, its platforms service over 3 billion unique users, and Meta has the best-in-class infrastructure and ad tech. Competition from TikTok (BDNCE) has been a big emphasis. They said that feedback from brand marketers on Reels’ performance is becoming more favorable and that advertising goods continue to advance rapidly.
The current price objective for Meta stock by Loop is $320, which indicates a potential upside of 34%.
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