Mizuho analysts reiterated Meta Platforms (NASDAQ:META) as a top pick, keeping a Buy rating and $575 price target on the stock in a note to clients on Monday.
The investment firm believes there are ample drivers for the company to pass the stress tests for both revenue and capital expenditure.
"Product drivers are more than enough to offset slowdown of Chinese advertisers," said Mizuho. "Our revenue stress test shows that even if top China customers' revenues declined 100% YoY, product upgrades and special events should more than offset that headwind by nearly 100 bps on FY24 growth rate."
While acknowledging that capex is likely to increase, Mizuho's stress test also shows that even if capex growth doubles from about 35% per guidance to 70%, margins can remain neutral with just 2 points of opex moderation.
"With manageable near-term issues and significant long-term optionality at 65% above FY23 rev/user, we maintain as a top pick," the firm concluded.