After climbing back to a trillion-dollar market capitalization, Meta Platforms still has room to run, BofA Securities said Thursday as they upped their price target for Meta stock.
Analyst Justin Post told clients in a note that Meta can benefit from a favorable digital advertising market and improving performance of its Reels short video product, among other factors. BofA raised its target price for Meta stock to 425 from 405 and affirmed a buy rating. The target implies roughly 9% upside from Wednesday's closing price for the Facebook and Instagram parent company.
"In 2024, we think Meta will remain a beneficiary of an improving digital ad market and lower interest rate environment," Post wrote.
Meta stock rose nearly 1% to close at 393.18 Thursday on the stock market today. It was down fractionally early Friday.
Meta Stock: Rejoining The Trillion-Dollar Club
Meta Platforms on Wednesday closed with a market cap above $1 trillion for the first time since 2021. The milestone capped a comeback from an epic slide in 2022. Mark Zuckerberg's social media giant won investors back by cutting costs while reinvigorating sales growth for its advertising business. Shares surged 194% last year.
That all leaves Meta with a tougher act to follow this year. BofA analyst Post wrote that it is likely Meta's revenue growth will slow against tougher comparisons later this year. But he expects that investors have already priced a sales deceleration into the stock.
"We think Meta is in a solid position with Instagram usage growth leading the sector and see the Reels/Messaging/artificial intelligence ad revenue cycle as still early given ad checks," Post wrote.
Zuckerberg told Meta stock analysts in October that Reels will be a "modest tail wind" for revenue this year after previously serving as a drag on sales. Meanwhile, the company is attempting to ramp up sales of ads that open direct messages between customers and businesses.
Post said Potential risks include a sales growth slowdown that pushes Meta's trading multiple lower. The company also could be hurt by a pullback in spending from Chinese e-commerce firms that are major advertisers on Facebook and Instagram. Additionally, Zuckerberg's vision of Meta leading a charge into the virtual-reality metaverse is still costing the company billions.
Earnings For Meta On Feb. 1
Meta will report fourth-quarter earnings on Feb. 1 after market close. BofA projects the company will post earnings and revenue ahead of consensus. Analysts are projecting Meta will post a 21% year-over-year sales increase to $38.9 billion and 175% earnings increase to $4.84 per share.
BofA is not the only firm positive on Meta. In a report to clients Thursday, Bernstein analysts maintained an overweight rating for Meta stock and price target of 435.
"Spoiler here is Meta's stock isn't going to be a 3-bagger again this year, but there's still plenty of reasons to own the name," wrote Bernstein analyst Mark Shmulik. Among those reasons, he added, are the monetization of Reels and continued adoption of the company's AI-powered Advantage+ advertising sales platform.
