- KeyBanc analyst Justin Patterson lowered the price target on Meta Platforms Inc (NASDAQ:FB) to $280 from $420 (16% upside) and kept an Overweight rating on the shares following quarterly results.
- The analyst notes measurement headwinds are clearly more significant than envisioned, and estimates reset materially.
- The positive is that Meta has historically managed these transitions before and come out stronger, Patterson notes.
- Given a stricter privacy environment and industry-wide measurement challenges, the analyst eventually believes Meta's investments in AI and Capex will yield long-term advantages over competitors, which should get the business back to a 20%-plus year-over-year growth profile in 2023.
- Patterson lowered the price target on Snap Inc (NYSE:SNAP) to $36 from $85 (44% upside) and kept an Overweight rating on the shares following Meta's and Alphabet Inc's (NASDAQ:GOOG) (NASDAQ:GOOGL) earnings reports.
- The analyst sees ongoing ad measurement headwinds driving shifts out of social, vertical headwinds, and margin pressure from investment. Taken together, multiples should compress, Patterson notes.
- While he is cautious the degree of margin risk could be a new sentiment overhang, he acknowledges valuation multiples have swung considerably, leaving room for results to be "less bad" than feared.
- Price Action: FB shares traded lower by 25.44% at $240.83, and SNAP is down 21.89% at $25.05 on the last check Thursday.
