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Investing.com - Deutsche Bank lowered its price target on Meta Platforms Inc. (NASDAQ:META) to $880 from $930 while maintaining a Buy rating, citing higher-than-anticipated AI and infrastructure investments. Meta currently trades at $668.21, with a market capitalization of $1.67 trillion and a P/E ratio of 23.85, which InvestingPro analysis shows is relatively low compared to its near-term earnings growth potential.
Meta shares dropped more than 8% in after-hours trading following the announcement of accelerated AI investments, which Deutsche Bank analyst Benjamin Black noted will result in significantly higher capital expenditures in the near to medium term.
The bank reduced its free cash flow estimates for Meta by approximately 40% for fiscal year 2026 and 30% for fiscal year 2027, reflecting the substantial capital commitments to AI infrastructure. Despite these reductions, Meta generated $50.1 billion in levered free cash flow over the last twelve months, demonstrating its strong cash generation capabilities.
Despite the reduced price target, Deutsche Bank emphasized that Meta’s core advertising business remains "fundamentally very strong" with AI investments driving continued engagement growth and improved ad platform performance, making it "the fastest growing ad platform at scale." This aligns with Meta’s impressive 19.37% revenue growth over the last twelve months to $178.8 billion, with analysts forecasting 19% growth for fiscal year 2025.
The bank defended the investment strategy, arguing that Meta’s infrastructure investments are "having strong returns in terms of engagement and ad performance" while potentially unlocking new opportunities across business messaging, Meta AI, and wearables, though it acknowledged the longer payback horizon for these investments. With an analyst consensus rating of 1.41 (Strong Buy) and 10+ additional InvestingPro Tips available, investors can access comprehensive analysis through Meta’s Pro Research Report, one of 1,400+ deep-dive reports available on the platform.
In other recent news, Meta Platforms has been the subject of various analyst updates following its latest financial results. Meta’s third-quarter earnings report exceeded revenue expectations, with revenue coming in 3% higher and operating income 5% better than anticipated. Despite this, there were mixed reactions from analysts. UBS raised its price target for Meta to $915, citing ad strength, while Truist Securities lowered its target to $875, despite acknowledging stronger-than-expected results and solid fourth-quarter guidance. Cantor Fitzgerald also adjusted its price target downward from $920 to $830, maintaining an Overweight rating, after Meta’s results surpassed street forecasts. DA Davidson maintained its price target at $825, reiterating a Buy rating, even though Meta’s earnings per share fell short of consensus expectations. In other developments, Meta introduced passkey-encrypted chat backups for WhatsApp, enhancing user security through biometric data or device screen lock codes. These updates reflect a range of perspectives on Meta’s financial performance and strategic initiatives.
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