On Monday, Stifel, a financial services company, increased its price target on shares of Meta Platforms Inc. (NASDAQ: NASDAQ:META) to $663 from the previous $590. The firm has maintained a Buy rating on the stock. The revision follows positive indicators from the company's performance, including a strong momentum heading into the fourth quarter, despite rising costs per thousand impressions (CPMs), which is a standard measure in advertising to denote the price of 1,000 advertisement impressions on one webpage.
The analyst from Stifel noted that advertisers are still achieving the required return on ad spend (ROAS) or better, indicating effective monetization of ads despite the inflation in CPMs. The report also highlighted the Advantage+ suite, Meta's advertising product, which is believed to be still under-penetrated in the market. Positive feedback on the product suggests potential for increased adoption and, consequently, greater budget allocation towards Meta's offerings.
In response to the findings, Stifel has adjusted its third-quarter revenue estimate for Meta to reflect a 19.2% year-over-year increase, which is at the higher end of the company's guidance. This is an upward revision from the previous estimate of a 17.5% year-over-year increase. For the fourth quarter, the firm anticipates a 15.5% year-over-year revenue growth, up from the prior estimate of 12.4%.
Additionally, Stifel has slightly lowered its total expense assumptions for Meta, bringing them closer to the midpoint of the company's guidance. This adjustment has led to an increase in the forecast for Meta's GAAP earnings per share (EPS) for 2024, now set at $21.37 compared to the previous $20.63. The estimate for 2025 GAAP EPS has also been raised to $25.33 from $23.51. These revisions reflect the firm's confidence in Meta's revenue growth and controlled expense management moving forward.
In other recent news, Meta Platforms Inc. saw its shares target raised by both Roth/MKM and Truist Securities, reflecting optimism in the company's medium and long-term prospects, despite a cautious stance as the third quarter earnings approach. Roth/MKM raised the stock's price target to $620, while Truist Securities increased its price target to $650. Additionally, KeyBanc raised its stock price target for Meta to $655, maintaining an Overweight rating influenced by advancements in Facebook Reality Labs and artificial intelligence (AI).
Meta Platforms also made significant strides in combating disinformation in Moldova, dismantling a network of fake accounts targeting Russian-speaking users in the country. This move is particularly crucial as Moldova prepares for its presidential election and a referendum on joining the European Union.
In another development, Meta, along with other tech giants, proposed an alternative power payment plan for data centers in Ohio. This proposal is a response to an ongoing dispute with utility company AEP Ohio over energy usage.
As the S&P 500 companies begin their earnings reporting season, investors are keenly observing the financial impact of investments in AI. Meta's investments in AI are anticipated to significantly enhance content ranking and recommendation systems, reflecting positive expectations for the company's upcoming third-quarter earnings.
InvestingPro Insights
Meta Platforms Inc.'s strong performance, as highlighted by Stifel's analysis, is further supported by real-time data from InvestingPro. The company's market capitalization stands at an impressive $1.5 trillion, reflecting its dominant position in the tech industry. Meta's revenue growth of 24.28% over the last twelve months aligns with Stifel's optimistic revenue projections for the upcoming quarters.
InvestingPro Tips reveal that Meta has a perfect Piotroski Score of 9, indicating strong financial health and operational efficiency. This score supports Stifel's positive outlook on the company's performance and expense management. Additionally, Meta's impressive gross profit margins, currently at 81.49%, underscore its ability to maintain profitability even as it navigates rising CPMs in the advertising market.
The company's P/E ratio of 29.44 and PEG ratio of 0.23 suggest that Meta may be undervalued relative to its growth prospects, which aligns with Stifel's decision to raise the price target. Investors seeking more comprehensive analysis can access 13 additional InvestingPro Tips for Meta, providing a deeper understanding of the company's financial position and market performance.
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