Analysts at Oppenheimer raised their price target on Meta Platforms Inc (NASDAQ:FB) to $220 per share from $145, after the company’s solid fourth-quarter earnings saw a revenue beat, trimmed costs and strengthening products.
Oppenheimer which has an “Outperform” rating on Meta, acknowledged the firm’s materially reduced expense projections and the “modest upside” in 4Q revenue. Meta beat 4Q topline estimates with $32.17 billion in revenue.
Investors reacted positively to Meta’s earnings and a series of rapid-fire upgrades, sending the company’s shares up 25.1% to $191.58 on the tec-dominated Nasdaq.
“Increasing target to $220 from $145 on 12% higher EPS and rolling our estimates to '24. 4Q update provided something for everyone: modest upside in 4Q revenue and 1Q guide, lower '23 expense & capex guide, strong engagement metrics and less discussion on the Metaverse,” said Oppenheimer analysts in a in a note to clients.
“4Q revenue/1Q guide 2%/1% above Street estimates. FY expense/capex guidance 5%/11% lower on headcount, reduced server depreciation more efficient facility/data center planning. Largely past ATT headwinds, with AI investments starting to drive higher ad conversions.”
Facebook competes with established Silicon Valley giants like Google and Microsoft and somewhat newer companies such as Pinterest, Twitter, and Tiktok owned by ByteDance. Oppenheimer noted that Meta’s focus on Tik Tok rival Reels for Instagram and Facebook seems to be working.
“MAP/DAP engagement +4%/5% y/y, suggesting META past TikTok overhang, with early benefits from AI recommended content,” said the analysts.
“Reels plays 2x y/y, re-sharing 2x in 6 months. 4Q ad conversions +20% year-over-year across Family of Apps. Click-to-message ads $10 billion revenue run-rate. >100% growth in shopper ads (>$100M run rate),” they added.
In its investment thesis, Oppenheimer pointed out that Meta is the world’s largest social networking company, with “3.7 billion monthly users across all properties.”
While Meta’s historical advantage has been the social graph and the ability to share and follow pictures and videos uploaded by users, the analysts noted that Meta now believes it must “evolve” to use advanced algorithms to “deliver content to users and leverage its social graph in the Metaverse.”
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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