Meta Platforms surges as Q1 profits beat estimates, Wall Street breathes sigh of relief
Meta Platforms (NASDAQ:FB) shares surged on Thursday after the tech giant posted first-quarter results and though some Wall Street analysts cut price targets, they collectively breathed a sigh of relief that the company's core business is not as bad as feared.
KeyBanc analyst Justin Patterson noted that macro issues and monetization with its Reels business will keep weighing in revenue growth for the rest of the year, prompting him to cut estimates by 3%. However, the analyst noted that "the degree of headwind is arguably better than concerns over the past week."
Meta Platforms (FB) shares surged more than 17% to $205.16 in premarket trading.
Patterson maintained the firm's overweight rating and $280-per-share price target on Meta Platforms (FB) shares.
Several analysts, including Patterson, remarked that Meta Platforms (FB) is showing some restraint in spending, particularly surrounding the metaverse, as the company cut operating expense guidance to be between $87 billion and $92 billion, down from a prior outlook of $90 billion to $95 billion, with Chief Executive Mark Zuckerberg hammering home that long-term profitability growth is important. 
"We view the action and the statement together as a sign management is carefully weighing investment levels against the health of the business and macro," Patterson added.
RBC Capital Markets analyst Brad Erickson, who rates Meta Platforms (FB) shares outperform with a $240-per-share price target, cut revenue and EBITDA estimates in light of the report, but the company's scale and ad targeting are long-term positives.
"FB's unmatched scale and targeting vs. social peers remains a competitive advantage and keeps us at Outperform but will need to show meaningful improvement to the various headwinds upcoming if the stock is going to more sustainably work," Erickson wrote in a note to clients.
BMO Capital Markets analyst Daniel Salmon trimmed the price target to $222 from $225 following the results, but noted that with shares trading at 5 times forward EBITDA, a relief rally came as "no surprise." 
Salmon also noted that Meta (FB) tightening expenses, daily active users returning to sequential growth and the continued monetization of Reels are positives. 
"However, many questions remain on privacy headwinds and ad platform changes as well as competition (i.e., TikTok, [Apple] [Google] from last [quarter])," Salmon, who rates shares "perform," wrote in a note to clients. 
Last week, MKM Partners highlighted broader economic worries and slashed its price target on Meta (FB) to $315 from $365 ahead of the company's first-quarter results.