Meta stock price target raised to $750 at Evercore ISI

On Thursday, Evercore ISI, a prominent research firm, raised its price target on Meta Platforms Inc. (NASDAQ: NASDAQ:META) shares from $725 to $750, while maintaining an Outperform rating. The adjustment follows Meta’s first-quarter earnings report, which showcased a revenue of $42 billion—up 19% year-over-year excluding foreign exchange impacts—a figure that exceeded expectations by 2%. According to InvestingPro data, Meta’s impressive performance is backed by industry-leading gross profit margins of 81.68% and a stellar Financial Health Score of "GREAT." More notably, the company’s operating income reached $17.6 billion, which is a 41% margin and stands 16% above Street estimates, marking the highest first-quarter operating margin in four years. InvestingPro analysis reveals that Meta maintains strong liquidity with a current ratio of 2.98, while generating an impressive return on invested capital of 27%.

The firm’s analysts highlighted the efficiency and scale benefits that contributed to Meta’s robust financial performance. The company’s guidance for second-quarter revenue was in line with analysts’ expectations. Additionally, Meta’s focus on artificial intelligence (AI) was underscored, with CEO Mark Zuckerberg outlining five key AI areas aimed at improving ad campaigns and increasing user engagement. For deeper insights into Meta’s AI strategy and its impact on financial metrics, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which covers over 1,400 top US stocks. The company’s successful integration of AI in these domains is believed to be driving a return on AI investment (ROAI).

Meta’s financial strategy was also noted, with the company lowering its total expenditure forecast for FY25, indicating years of efficiency gains, while simultaneously increasing its capital expenditure guidance due to accelerated investments in data centers and rising infrastructure hardware costs due to tariffs. Despite these aggressive investment plans, Meta’s position is considered strong, supported by a robust online advertising market, user and engagement growth, and effective monetization strategies.

The report mentioned Meta’s impressive fundamentals, including an anticipated 20% revenue growth on a $200 billion revenue base, operating margins over 40%, and more than $50 billion in run-rate free cash flow, which indicates a rising return on invested capital (ROIC). This strong performance is reflected in Meta’s PEG ratio of 0.37, suggesting attractive valuation relative to growth prospects. InvestingPro subscribers have access to 12 additional key insights about Meta’s financial health and growth potential. These factors, coupled with the company’s valuation at less than 20 times price-to-earnings (P/E) ratio, were cited as compelling reasons for the stock’s positive outlook.

Evercore ISI concluded by reiterating its Outperform rating for Meta, noting the company’s strong market position and the potential for untapped monetization opportunities in its various platforms, including Threads, Meta AI, WhatsApp, and Facebook Marketplace. Despite facing macroeconomic uncertainties, Meta’s strategic investments and solid financials affirm the long thesis for the company, positioning it as a highly attractive investment option.

In other recent news, Microsoft (NASDAQ:MSFT) and Meta Platforms have reported quarterly earnings that exceeded expectations, highlighting strong performances in their respective business areas. Microsoft’s third-quarter results were buoyed by its thriving cloud business, benefiting from increased demand for AI services. Meta Platforms also outperformed expectations in the first quarter and provided an optimistic outlook, increasing its full-year forecast for capital expenditures as it focuses on AI investments. Following these developments, Oppenheimer raised Meta’s stock price target to $665, while Truist Securities increased it to $720, both maintaining positive ratings on the stock. Additionally, Piper Sandler adjusted its price target for Meta to $650, citing the company’s robust financial performance and strategic focus on AI initiatives. Meanwhile, Apple (NASDAQ:AAPL) faced a setback as a federal judge ruled that the company had violated a court order regarding its App Store, impacting its stock performance. These recent developments underscore the ongoing focus on AI investments and regulatory challenges in the tech industry.

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