Meta Stock (NASDAQ:META)
As the latest in a succession of optimistic reports from analysts poured in early Thursday, Meta Platforms (NASDAQ:META) followed the rest of the market higher by rising by 1%.
After extensive research on Meta’s “mostly neglected” Click-to-Message advertising area, Mark Mahaney of Evercore ISI reaffirmed the firm’s Outperform rating.
CTM ads are now Meta’s primary messaging monetization vehicle, allowing companies to put advertisements on Facebook and Instagram feeds that include a call to action button that opens a direct conversation (as of this week, Facebook Reels).
Since its introduction in 2015–2016, this sector has had “notable success in developing economies,” according to Mahaney. It has risen to a $10B annual revenue run rate, on pace to reach 10% of total sales.
To paraphrase what Mahaney had to say about CTM: “We view CTM as further broadening META’s marketing portfolio, offering an endemic advertising solution for businesses in developing markets, and perhaps most importantly, allowing META to effectively monetize two of its largest assets—Facebook Messenger and WhatsApp—the two largest messaging apps in the world with each having 2B+ users.”
He is sticking with a $305 price target on Meta stock, which would suggest an 80% gain now.
In anticipation of Meta’s performance in the first quarter, Credit Suisse analyst Stephen Ju increased his price objective to $251. He has updated the model to reflect the most recent cost-cutting measures. (The corporation announced towards the middle of March that it will be laying off another 10,000 workers as part of their “year of efficiency.”)
With “two waves of cost reduction previously publicized and behind us,” he writes, “the investment rationale now rests on revenue growth outperformance.” He notes that the business is optimistic since Click-to-Message has helped compensate for the income lost due to Apple’s privacy measures.
Ju added, “from a product dev viewpoint, we feel the most relevant recent update lays with Instagram’s statement that it would start to offer advertisements inside search results, which we believe should bring a new stream of high-margin income”), and against that background, they’d add search revenue.
Credit Suisse has raised its adjusted EPS forecast for fiscal 2023 to $14.71 from $13.96 and for fiscal 2024 to $16.91 from $15.36.
Meta stock is rated as a Strong Buy by Seeking Alpha’s Quant Ratings, which agrees with Wall Street analysts’ consensus Buy recommendation.
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