Guggenheim cuts Meta Platforms price target to $675, keeps Buy rating

Tuesday, Guggenheim Securities adjusted its outlook on Meta Platforms Inc. (NASDAQ: NASDAQ:META), reducing the 12-month price target to $675 from $750, yet reaffirming a Buy rating on the stock. Currently trading at $516.25, Meta maintains impressive gross profit margins of 81.7% and holds more cash than debt on its balance sheet. The adjustment was made in light of expectations set for the company's first-quarter earnings, focusing on advertiser demand, global trade's impact, and investment strategies for growth. According to InvestingPro analysis, Meta's current market valuation appears fairly priced relative to its Fair Value.

Analysts at Guggenheim highlighted Meta's robust user engagement, referencing Apptopia data that showed an increase in time spent on Facebook and Instagram in the first quarter. Facebook's user time grew by 9.3%, an improvement from 6.5% in the previous quarter, while Instagram saw a 5.9% rise, recovering from a 1.0% decline. These figures suggest strong performance in retaining and engaging users, which has translated into solid financial results, with revenue growing 21.9% over the last twelve months to $164.5 billion.

Despite concerns over the global economic climate, Meta is perceived as gaining market share in the first quarter. The company's advertising innovations, such as Advantage+, Reels, and enhanced messaging features, are seen as key contributors to this positive trend. Guggenheim's forecast for Meta's first-quarter advertising revenue remains at the upper end of the company's guidance, ranging between $39.8 billion and $41.8 billion.

However, the firm has moderated its expectations for ad revenue growth for the remainder of the year, revising its industry-wide ad demand growth projection for 2025 down to 12.5% from 15.1%. This cautious stance reflects anticipated deceleration in the sector.

Despite the lower price target, Guggenheim does not anticipate Meta will scale back on its AI investment strategy, specifically mentioning the upcoming Llama 4 release. The revised price target is based on a 5% decrease in the estimated EBITDA for 2026 and a reduction in the market multiple used for valuation purposes. The Buy rating indicates Guggenheim's continued confidence in Meta's long-term prospects. InvestingPro data reveals Meta's excellent financial health with an overall score of 3.11 out of 5, supported by strong cash flows and robust profitability metrics. For deeper insights into Meta's valuation and 14 additional exclusive ProTips, consider accessing the comprehensive Pro Research Report available on InvestingPro.

In other recent news, Meta Platforms has been under scrutiny by the European Union for potential violations of the Digital Markets Act, with a decision expected in the coming weeks. Meanwhile, Jefferies has reaffirmed its Buy rating on Meta Platforms, maintaining a price target of $600. Analyst Brent Thill highlighted Meta's advancements in large language models, particularly the Llama 4 update, as a key factor in the company's continued industry leadership. Intel (NASDAQ:INTC) has also announced support for Meta's Llama 4 models, integrating them with its Gaudi 3 AI accelerators and Xeon processors to enhance AI workload efficiency.

In premarket trading, Meta's shares saw a 2.1% rise, reflecting its position among the Magnificent Seven stocks, which include other tech giants like Nvidia (NASDAQ:NVDA) and Amazon (NASDAQ:AMZN). However, the Magnificent Seven stocks, including Meta, experienced a decline of 5% in a recent session amid broader market selloffs. The Bloomberg Magnificent 7 index, which tracks these companies, has dropped 24% this year after a significant rise last year. These developments come as the market continues to navigate economic uncertainties, including trade tensions.

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