On Thursday, Deutsche Bank adjusted its outlook on Meta Platforms Inc. (NASDAQ: NASDAQ:META), increasing the firm's price target from $525 to $585 while sustaining a Buy rating on the stock.
The new price target of $585 is based on a 23 times multiple of the projected 2025 GAAP EPS of $24.89, an increase from the prior multiple of 22 times.
The revision comes amid expectations of significant capital expenditure growth in fiscal year 2025, driven by investments in core artificial intelligence (AI) work, which is anticipated to yield an attractive return on investment in the near term.
The bank's analyst highlighted Meta's robust advertising revenue growth as a key indicator of the company's successful investment in AI. The growth, along with a clearer view of the potential for monetizing long-term investments, has provided the analyst with added confidence in the company's capital expenditure plans, which are projected to be higher for an extended period.
As a result of these factors, Deutsche Bank has modestly increased its revenue projections for Meta Platforms for fiscal years 2024 and 2025 to $162 billion and $184 billion, respectively. These figures suggest year-over-year growth of 20% and 13%.
Consequently, the analyst anticipates an uptick in Meta's GAAP earnings per share (EPS) for the same years, adjusting the forecast to $21.60 for FY24 and $24.89 for FY25, up from previous estimates of $21.13 and $24.44.
InvestingPro Insights
As Deutsche Bank updates its outlook on Meta Platforms Inc. (NASDAQ: META), a look at the real-time data and InvestingPro Tips offers additional context for investors considering the company's prospects. Meta's market capitalization stands at a robust $1.2 trillion, reflecting its significant presence in the market. The company's Price/Earnings (P/E) ratio of 26.62, which adjusts to 24.9 based on the last twelve months as of Q1 2024, indicates a valuation that is in line with its earnings growth. Moreover, Meta's impressive gross profit margin of 81.5% during the same period underscores the efficiency of its business model.
InvestingPro Tips highlight Meta's strong liquidity position, with the company holding more cash than debt on its balance sheet, and its liquid assets surpassing short-term obligations. This financial health is critical for Meta as it continues to invest heavily in AI and other strategic initiatives. Additionally, analysts have shown confidence in Meta's future performance, with 8 analysts revising their earnings upwards for the upcoming period, suggesting that the company's investments may indeed yield the anticipated attractive returns.
For investors intrigued by these insights, there are over 12 additional InvestingPro Tips available for Meta Platforms Inc., offering a deeper dive into the company's financials and market position. For those seeking a comprehensive analysis, visiting InvestingPro at https://www.investing.com/pro/META can provide a wealth of information to inform investment decisions.
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