Meta cost cuts could lead to 10% earnings boost - Morgan Stanley
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Reports of some substantial cost cuts at Meta Platforms (NASDAQ:META) could lead to earnings cresting the $11-a-share mark, and such cost reductions could also boost the company's third-quarter earnings, according to a report from analyst Brian Nowak at Morgan Stanley.
Nowak said that consistent with prior years, Meta (META) has continued to reduce operating expenditures [opex] and capital expenditures [capex] guidance throughout the year, but, "This this is the first report of potential layoffs as departments reorganize."
Making 10%-plus cuts to a run-rate operating expenditure total that was $18.5B as of Meta's (META) second quarter implies some $5B in opex savings in 2023, Nowak said, after extrapolating growth from a cut to the base of $1.8B.
That would reduce opex excluding depreciation and amortization to about $77B in 2023 - and assuming revenue is unchanged, it leads to EBITDA growth of about 11%, to $48.6B.
Opex savings of $3B to $8B adds up to an incremental 43 cents to $1.99 a share in 2023 earnings, Nowak said, compared to the firm's estimate for $9.90 a share.
Nowak said, "Confirming these cuts, clarity on revenue, engagement [and] time spent, and reels monetization" are key catalysts for Meta's (META) third-quarter earnings-per-share goals. 
Nowak has an overweight rating and a $225-a-share price target on Meta's (META) stock. Meta's (META) shares edged up by 0.5%, to close Thursday at $142.82.
Meta stock (META) got a bump Wednesday after the cost-cut detail came out in a report addressing Meta's layoff-free approach to shedding headcount.