Meta Platforms bull camp expands with more positive takes
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The train keeps on rolling for bullish analysis on Meta Platforms (NASDAQ:META), with a stock rally now reaching to five months and a new pair of positive reports emerging Wednesday.
Meta hit its 52-week low of $88.09 on Nov. 4, almost exactly five months ago. Now it's up to $212.89, up nearly 142% off the low, alongside a steady stream of upbeat takes from Wall Street.
That now includes an upgrade to Buy at Argus Research, and like others, the firm cites some deep cost cuts: Meta's "year of efficiency" is now ushering in more than 20,000 job cuts, some of the deepest among technology firms.
"Cost cutting will not do much for Meta's revenue issues, which reflect macroeconomic uncertainty, the slowdown in digital advertising, and the impact of Apple's ad tracking policy," Argus said -- echoing a stance from Benchmark, which last week said a rally on the job cuts was "over" and that consensus revenue expectations were "simply unrealistic."
"However, the cost cuts do demonstrate prudence by management and should improve profitability, thus giving the market what it wants," Argus said. The firm has a target price of $270, implying 28% upside.
Jefferies on Wednesday argued that Meta can accelerate revenue growth in the second half. A combination of artificial intelligence investments leading to higher engagement and easier comparisons should speed up that growth, while the expense cuts (combined with more buybacks) may drive upside in earnings per share, analyst Brent Thill said.
A "mega capex investment phase" is moderating as well, he noted, which should bring higher free cash flow conversion: "Over time, we believe META can achieve a capital intensity that more closely resembles its big tech peers, with capex being in the mid-teens" as a percentage of revenue.
He sees Meta generating $12-plus in earnings per share by 2024. (Wall Street expects the company to post EPS of $9.63 in 2023.) Thill has a price target of $250.
And while Seeking Alpha analysts and Wall Street analysts alike have a Buy rating, Seeking Alpha's Quant Ratings consider Meta a Strong Buy.