On Tuesday, Monness Crespi Hardt updated its outlook on Meta Platforms Inc. (NASDAQ: NASDAQ:META), raising the price target to $650 from the previous $620, while reiterating a Buy rating on the stock. The firm's analysis highlighted the robust performance of Meta compared to Alphabet (NASDAQ:GOOGL) over the past year, noting a market preference for Meta's shares.
The review of Meta's stock performance came after the third-quarter earnings were released, prompting a reassessment of Meta in relation to Alphabet. Despite an earlier shift in favor of Alphabet about six months ago, which then saw Alphabet underperform by 18% compared to Meta, the firm has now provided an updated perspective.
Monness Crespi Hardt's examination of the two tech giants reveals that both Meta, excluding Reality Labs, and Alphabet, excluding Other Bets, are trading at nearly 2025 P/E ratios slightly below 18X. This valuation is based on the firms' estimates and reflects the similar earnings outlook for both companies.
The analyst's comments underscored the strength of Meta's core assets, particularly highlighting the potential for a stronger advertising revenue cycle bolstered by AI enhancements. The comparison between Meta and Alphabet considered the underlying factors that have led to the variance in their stock performance over the past year.
In the broader context, the firm believes that the market continues to undervalue the long-term core earnings power of both companies. The current multiples for Meta and Alphabet are noted to be almost 20% below the 2025 S&P 500 multiple, suggesting a potential undervaluation by the market.
In other recent news, significant developments have occurred in the technology sector. Meta Platforms Inc., previously known as Facebook, is currently facing a series of legal challenges. A U.S. District Judge ruled that Meta's CEO, Mark Zuckerberg, cannot be held personally liable in a series of lawsuits alleging the company's social media platforms have caused addiction in children.
Meanwhile, the U.S. Supreme Court is reviewing an appeal from Meta regarding a securities fraud lawsuit, initiated by shareholders who claim the company failed to disclose the misuse of user data.
In a separate development, South Korea's Personal Information Protection Commission imposed a fine of approximately $15.67 million on Meta for improperly collecting and using sensitive personal data from nearly 980,000 South Korean users.
On another front, the Web Summit, Europe's largest annual tech event, is currently underway in Lisbon. The conference features discussions on a range of topics, including the potential effects of Donald Trump's return to the presidency on Europe.
Trump has recently pledged to investigate and prosecute a range of individuals, including tech executives, if he assumes the presidency again, with Meta's CEO Mark Zuckerberg among those mentioned.
These are just a few of the recent developments in the tech sector.
InvestingPro Insights
Meta Platforms' recent performance aligns with Monness Crespi Hardt's bullish outlook. According to InvestingPro data, Meta's revenue growth stands at 23.06% for the last twelve months as of Q3 2024, with an impressive gross profit margin of 81.5%. These figures underscore the company's strong financial health and market position.
InvestingPro Tips highlight that Meta "holds more cash than debt on its balance sheet" and has "impressive gross profit margins," which supports the analyst's positive view on the company's core assets and potential for stronger advertising revenue. Additionally, the tip that "26 analysts have revised their earnings upwards for the upcoming period" aligns with the market's preference for Meta shares noted in the article.
The current P/E ratio of 26.69 reported by InvestingPro is higher than the 2025 P/E ratio mentioned in the article, suggesting potential for further growth. Moreover, Meta's year-to-date price total return of 65.25% reflects the strong market performance discussed.
For investors seeking a deeper understanding of Meta's potential, InvestingPro offers 14 additional tips, providing a comprehensive analysis of the company's financial health and market position.
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