Meta Platforms Inc (NASDAQ:META, ETR:FB2A, SWX:FB) has drawn repeated backing from analysts despite pointing to potentially slower revenue growth ahead in third-quarter results on Wednesday.
Jefferies analysts noted guidance for revenue of $45-$48 billion, or a 12.2% to 19.7% increase, in the fourth quarter did suggest a “limited slowdown” against tougher comparables.
However, “we believe investors will be pleased to see growth approaching [around] 20%,” analysts added, given the tougher comparison.
“Ad demand remains healthy,” Jefferies highlighted, citing comments in Meta’s post-earnings call.
“Continued improvements in ad performance should drive elevated levels of growth.”
Citi analysts added Meta appeared to be continuing to gain overall share in the advertising market after revenue from the segment ticked up 20% excluding foreign exchange movements in the third quarter.
“One of our biggest takeaways from the quarter was engagement gains at both Instagram and Facebook from Meta’s AI recommendation engine,” Citi said.
“On monetization, we note greater conversion gains from its one million-plus advertisers using Meta’s generative AI tools.”
Jefferies lifted expectations for revenue and operating income at Meta over the coming year, forecasting margins to also increase from 41% to 42% between 2024 and 2025.
Growing capital expenditure remained in focus, Jefferies said, noting this could overshoot Street expectations and sit in the $50 billion range next year.
Guidance was expected to be offered in fourth-quarter results, according to analysts, with Wedbush arguing increased investment would be “justified” as it also lifted revenue and income forecasts for 2025.
“Meta's investments are already driving improvements in the core business,” Wedbush said.
“AI-driven feed and video recommendations have increased time spent on Facebook and Instagram this year by 8% and 6% respectively.”
Both Jefferies and Wedbush reiterated share price targets of $675 and $640 respectively, while ‘buy’ and ‘outperform’ ratings were repeated.
Citi hiked its target to $705 in the meantime and also held a ‘buy’ rating, adding “we would take advantage of any dislocation in shares”.
Shares were trading 2.7% lower on Thursday at $576.06.