Meta stock price target cut to $700 at Bernstein

On Tuesday, Bernstein analysts adjusted their outlook on Meta Platforms Inc. (NASDAQ: NASDAQ:META), reducing the price target to $700 from the previous $800, while still maintaining an Outperform rating. Currently trading at $549.74, Meta shows strong financial health according to InvestingPro analysis, with an impressive gross profit margin of 81.68%. The analysts highlighted Meta’s continued strength in the digital advertising space, noting that the company has managed to maintain healthy ad traction in the first quarter, even amidst challenging headlines.

The company’s advertising technology efforts are reported to have driven significant return on ad spend (ROAS) improvements for advertisers. With revenue growing at 21.94% over the last twelve months and generating $54.07 billion in free cash flow, Meta’s financial performance validates its strategic initiatives. Additionally, the introduction of new ad inventory from Threads and Notifications is seen as a way for the platform, which boasts the largest number of active advertisers, to provide self-help options.

Bernstein’s analysts hold a non-consensus view that Meta’s ad units offer a more defensive position against competitors like Google, despite Meta having greater exposure to China and the retail sector. They also pointed out that the year could bring further catalysts beyond advertising, such as advancements in Business Messaging, Wearables, and possible reductions in expenses, especially if the operating environment requires it.

The analysts referenced Meta management’s previous suggestion that by the end of the year, AI could reach a ’mid-level engineer’ level, indicating potential operational improvements and efficiency gains. Despite the downward price target revision, Bernstein maintains a positive outlook on Meta’s stock, affirming an Outperform rating with a new price target of $700 per share. For deeper insights into Meta’s AI initiatives and comprehensive financial analysis, including 13 additional ProTips, check out the detailed Pro Research Report available on InvestingPro.

In other recent news, Meta Platforms has been the focus of several significant developments. Loop Capital adjusted its price target for Meta, reducing it to $695 from $900 while maintaining a Buy rating. This revision was influenced by a decline in ad pricing due to reduced spending by Chinese advertisers, and Loop Capital projects Meta’s second-quarter revenue to be between $40.5 billion and $43.0 billion, which is below the consensus estimate. Despite these challenges, Loop Capital views Meta as an attractive option for growth investors. Additionally, Meta recently announced layoffs within its Reality Labs division, impacting teams involved in developing titles like the VR fitness game Supernatural. The division reported a $5 billion loss in the fourth quarter, but CEO Mark Zuckerberg remains committed to augmented and virtual reality. Meanwhile, Meta’s shares rose 4.3% after Alphabet (NASDAQ:GOOGL) exceeded first-quarter advertising sales forecasts, positively impacting social media stocks. The interconnectedness of the tech stock market was further highlighted as Meta experienced a 4.2% increase following Alphabet’s strong performance.

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