Meta stock price target cut to $695 at Loop Capital

On Monday, Loop Capital made an adjustment to the price target of Meta Platforms Inc. (NASDAQ: NASDAQ:META), bringing it down to $695 from the previous $900. Despite the significant reduction, the firm maintained its Buy rating on the company’s stock. The revision comes as the analyst anticipates Meta to deliver strong first-quarter results but a less optimistic future outlook. With a current market capitalization of $1.38 trillion and a P/E ratio of 22.24x, Meta trades near its InvestingPro Fair Value, suggesting balanced market expectations.

According to the analyst, a decrease in ad pricing has been observed, primarily due to Chinese cross-border advertisers scaling back their marketing efforts in the United States. This change is attributed to the closure of the de minimus exemption and the implementation of tariffs. Meta, recognized as a leading platform for acquiring new customers, has been affected by the reduced spending from these Chinese advertisers, which has historically fueled the intensity of bidding and ad pricing on the platform. Despite these challenges, Meta maintains impressive gross profit margins of 81.68% and has achieved revenue growth of 21.94% over the last twelve months.

Loop Capital’s analysis suggests that Meta may experience a 40% revenue leakage on inventory previously secured by this group of advertisers. Nevertheless, some revenue is expected to be preserved as these impressions are passed on to the next highest bidders. The firm also notes that other key performance indicators such as conversion rates and click-throughs are showing signs of weakness. If these trends persist, performance marketers may be compelled to reduce their spending.

The forecast for Meta’s second-quarter revenue is projected to be between $40.5 billion and $43.0 billion, which is lower than the consensus estimate of $43.9 billion. However, the analyst believes that the guidance may exceed market expectations and what is currently reflected in the stock’s price. Investors should note that Meta’s next earnings report is scheduled for April 30, 2025. InvestingPro subscribers have access to 13 additional exclusive insights and comprehensive financial metrics to better evaluate Meta’s performance potential.

The price target has been adjusted not only based on revised estimates but also due to a reduced target multiple, now set at 25 times earnings per share (EPS), down from 30 times. The analyst expects that investor sentiment and the volatility of Meta’s stock price will continue to be influenced by evolving trade tensions. Despite these challenges, Loop Capital views the current issues as temporary and believes that Meta remains an attractive option for growth investors looking to capitalize on market weaknesses. InvestingPro data reveals Meta’s PEG ratio of 0.37, suggesting attractive valuation relative to its growth prospects. Access the full Pro Research Report for comprehensive analysis of Meta’s financial health, which currently rates as GREAT according to InvestingPro’s proprietary scoring system.

In other recent news, Alphabet (NASDAQ:GOOGL) reported first-quarter advertising sales that exceeded expectations, with revenue rising 8.5% to $66.89 billion. This surpassed analysts’ predictions of a 7.7% increase, driven largely by investments in artificial intelligence. The positive earnings report also led to a rise in the shares of social media companies, including Meta Platforms and Pinterest (NYSE:PINS). Meanwhile, Tesla (NASDAQ:TSLA) raised prices in Canada and encouraged the purchase of EVs imported before counter-tariffs on U.S.-made vehicles are imposed. Nvidia (NASDAQ:NVDA) experienced a decline in shares following reports of Huawei’s development of a new AI processor that could rival Nvidia’s products. Meta Platforms announced layoffs within its Reality Labs division, impacting teams involved in virtual reality development. Despite a reported $5 billion loss in the fourth quarter for Reality Labs, CEO Mark Zuckerberg remains committed to augmented and virtual reality technologies. Additionally, Meta is taking steps to combat spammy content on Facebook by reducing the visibility and monetization of such content, enhancing user experience, and protecting authentic creators.

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