Meta Platforms (META) shares jumped higher Tuesday after analysts at Citigroup raised their price target on the Facebook and Instagram parent to the highest on Wall Street, citing the potential for generative AI to boost advertising revenues.
Citigroup analyst Ron Josey lifted his price target on Meta Platforms to $360 per share, a $45 increase from his previous level, while keeping his 'buy' rating in place for the social media giant.
Meta unveiled a series of new AI-related tools it plans to roll-out across its various apps earlier this month, including a chatbot similar to ChatGPT for Facebook Messenger and WhatsApp and has said its been working with advertisers in testing consumer-facing generative AI techniques.
That could help boost ad revenues, the vast majority of Meta's top line, as it heads into a difficult second half in terms of broader economic growth and reduced corporate spending.
“We now project 2024 advertising revenue growth of 14% year-on-year and believe Meta’s investments in GenAI can deliver incremental usage across its users, creators, and advertisers,” Josey wrote.
"Not withstanding the risk of recession, but for the here and now and for the next couple of quarters, we feel as if the ad environment is more than stable, if not improving," he later told CNBC. "We think Meta is investing in ad tools and products that will drive higher conversion rates and, as we point to Reels, broader engagement levels are also starting to improve."
Meta Platforms shares were marked 2.9% higher in early afternoon trading to change hands at $286.50 each, a move that would stretch the stock's astonishing year-to-date gain to around 136% and value the group at around $734 billion.
Earlier this spring, Meta said active users across its 'Family of Apps', which includes Facebook, Instagram and WhatsApp, rose 2% from last year to just under 3 billion, while daily active users were up 4% from last year at 2.03 billion, just ahead of the Street's 2.01 billion estimate. Ad impressions rose 26%, Meta said, although the average price per ad was down 17%.
Still, overall revenues rise 2.65% from last year -- its first annual gain since 2021 -- to $28.1 billion.
Looking into the current quarter, Meta said it sees revenues in the region of $29.5 billion to $32 billion, a range that fall under the Street forecast of $32.3 billion.
"Our AI work is driving good results across our apps and business," CEO Mark Zuckerberg told investors on April 26. "We're also becoming more efficient so we can build better products faster and put ourselves in a stronger position to deliver our long term vision."
