Meta Platforms Inc (NASDAQ:META, ETR:FB2A, SWX:FB) is expected to deliver a modest revenue and earnings per share beat for the first quarter after Wednesday's closing bell driven by healthy advertising trends and tight cost controls, analysts at Bank of America believe.
“We think Meta's AI-driven ad improvements still have several quarters to play out and for 2025 we see strong drivers of growth,” they wrote.
The analysts wrote that constructive checks support their view that Meta’s first-quarter revenue will land at the high end of its $40.5 billion to $41.8 billion guidance range.
They forecast Q1 revenue of $41.2 billion, slightly ahead of Street estimates of $41.4 billion, and expect earnings per share of $5.42 versus consensus at $5.24.
Workforce reductions earlier this year, including layoffs in the Reality Labs division, are also seen as contributing to a tighter cost structure. "Management seems focused on controlling operating costs," analysts wrote.
Meta’s second quarter guidance will be a key focus, Bank of America added. They believe foreign exchange benefits and leap year effects could lift revenue growth by four percentage points quarter-over-quarter. However, they also flagged slowing China retailer ad spend as a headwind, estimating it represents around 3% of total revenues.
They projected Meta to guide revenue in the range of $40.5 billion to $44 billion, representing year-over-year increases of 4% to 13%. "We expect some conservatism in Q2 guidance,” they noted.
On expenses, Bank of America sees the potential for Meta’s full-year cost trajectory to move toward the lower end of its $114 billion to $119 billion forecast range but does not expect an official revision on the company's earnings call.
The analysts repeated their ‘Buy’ rating on Meta with a $640 price target.
Shares traded hands at about $540 late morning on Wednesday.
- Updated with share price movement -