Meta stock rating downgraded by Punto Casa de Bolsa on rising costs

Investing.com - Punto Casa de Bolsa downgraded Meta Platforms Inc. (NASDAQ:META) from Buy to Sell with a price target of $655.15, citing concerns over the company’s escalating expenditures. The tech giant, currently valued at $1.7 trillion with a P/E ratio of 24.5, has seen its stock rise over 28% year-to-date according to InvestingPro data.

The Mexican brokerage firm pointed to Meta’s capital expenditures reaching an all-time high, now representing 37% of quarterly revenue, while operating expenses continue to climb. The firm expects both areas to grow further in 2026, according to its research note.

Despite acknowledging Meta’s strong revenue and user growth, along with improvements in its automated advertising solutions, Punto Casa de Bolsa expressed concern about the company’s ability to monetize its artificial intelligence developments in the short term. InvestingPro data shows Meta’s revenue reached $178.8 billion in the last twelve months with impressive 19.4% growth.

The downgrade also cited compressed margins, accelerated cash burn, and an adverse regulatory environment in Europe as factors contributing to what the firm described as an "unattractive" risk-return profile. Interestingly, InvestingPro data reveals Meta maintains strong gross profit margins of 82% and generated over $50 billion in free cash flow over the past year.

Punto Casa de Bolsa’s $655.15 price target represents the firm’s valuation for Meta shares at the close of 2026, following adjustments to its valuation model based on the latest company information. This target aligns closely with Meta’s current Fair Value according to InvestingPro models, which offer comprehensive analysis through Pro Research Reports available for Meta and 1,400+ other US equities.

In other recent news, Meta Platforms Inc. reported third-quarter results that surpassed revenue forecasts, with a 3% increase in revenue and a 5% improvement in operating income compared to expectations. Despite this, the company’s diluted earnings per share (EPS) were significantly below consensus estimates, coming in at $1.05 versus the anticipated $6.70. Analyst firms have responded to these developments with varying adjustments to their price targets. Deutsche Bank lowered its target to $880, citing increased capital expenditures on AI and infrastructure. Conversely, UBS raised its price target to $915, highlighting the strength in Meta’s advertising sector, despite a modest revenue guidance for the fourth quarter of 2025. Cantor Fitzgerald also adjusted its target downward to $830 but maintained an Overweight rating. Additionally, Meta introduced a new feature for WhatsApp, enabling passkey-encrypted chat backups to enhance user security. DA Davidson reiterated its Buy rating with a price target of $825 following the earnings report.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.