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Truist Securities analyst Youssef Squali maintained Meta Platforms Inc (NASDAQ:META) with a Buy and raised the price target from $525 to $550.
The analyst raised his first-quarter and fiscal 2024 estimates for META to reflect improving pricing and monetization (particularly Reels) after a couple of years of compression, higher impression volume, and sustained must-buy status within the digital ad ecosystem amid ongoing cookie deprecation and a volatile macro.
Meta’s significant investments across its AI initiatives are yielding better ranking and recommendation results for users and advertisers alike, according to the analyst, and should bolster META’s competitive moat for years to come.
Squali projected $36.5 billion in revenue (prior $36.12 billion), which is at the high end of management’s guidance and virtually in line with Street consensus of $36.11 billion. He expected an EPS of $4.28 (prior $4.18) versus the consensus of $4.30.
The first quarter will mark the first anniversary of the rebound in global ad demand (revenue growth inflected in the first quarter of 2023, growing +4% year-on-year), and he did not expect an adverse impact from current events in the Middle East.
According to the analyst, Meta continues to progress in reversing the significant targeting headwinds caused by IDFA in the last couple of years.
Squali added that management’s first-quarter revenue guide assumes FX is neutral to overall revenue growth.
Squali expected management to guide inline for the second quarter and reiterate its operating expenditures of $94 billion-$99 billion and Capex of $30 billion-$37 billion for fiscal 2024 as it invests in high-priority areas. He also expected the operating margins to improve throughout 2024.
Meta stock gained over 126% in the last 12 months. Investors can gain exposure to the stock via The Communication Services Select Sector SPDR Fund (NYSE:XLC) and Fidelity MSCI Communication Services Index ETF (NYSE:FCOM).
Price Action: META shares traded lower by 0.78% at $495.88 on the last check Wednesday.
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