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Meta Platforms (NASDAQ:META) soared nearly 25% in mid-day trading on Thursday, nearing the $500B market cap level, after the Mark Zuckerberg-led company’s fourth-quarter results and guidance were better than feared.
Wall Street analysts reacted to Meta’s (META) report by racing to upgrade the stock and praise the social-media giant’s “year of efficiency.”
Rosenblatt Securities analyst Barton Crockett upgraded Meta (META) to buy from neutral and raised his price target to $220 a share from $104, stating the company now has the “durability” to receive a premium earnings multiple.
“With Meta reaching 3.74B people monthly, it has durability that over time could confer a premium multiple,” Crockett wrote in a note to clients. To emphasize Meta’s (META) worldwide presence, Crockett added that the company’s monthly reach is equal to 47% of the global population.
Crockett said that another thing in Meta’s (META) favor is that company is “unlevered, and following the maturing company playbook to a normal mix of debt and equity could open up meaningfully higher share repurchase.”
In conjunction with its quarterly results and guidance, Meta (META) announced a new $40B share buyback program.
Bank of America analyst Justin Post boosted his rating on Meta (META) to buy from neutral and raise his stock price target to $220 a share from $160, while praising the more efficient mindset from company management.
“The stock is now positioned for leverage [and] EPS upside as the ad environment improves,” Post wrote in a note to clients. He added that the environment is also improving, due to growing usage of Reels and ByteDance’s (BDNCE) TikTok seeing a deceleration in daily active users.
Post said that based on what Meta (META) said on its earnings call about improvements in ad conversions, the company could become a play on a “multi-year artificial intelligence [and] machine learning improvement cycle.”
J.P. Morgan analyst Doug Anmuth reiterated his overweight rating on Meta (META) and raised his price target to $225 a share, noting that the company is “building critical muscle” to operate as a disciplined company.
“Importantly, we expect this recently-found discipline to drive a stronger and more nimble organization over the long-run, not just for the next 12 months,” Anmuth said.
Investment firm Piper Sandler also upgraded Meta (META), following the results, boosting its rating to overweight from neutral and raising the per-share price target to $215.
For the quarter ending in December, Meta (META) earned $1.76 a share, excluding one-time items, on $32.17B in revenue, with sales including $31.44B from its family of apps such as Facebook, Instagram and WhatsApp.
Analysts were expecting Meta (META) to earn $2.23 per share on $31.69B in revenue.
The company’s Reality Labs unit accounted for $727M in quarterly sales, also topping estimates.
Several advertising-related stocks moved sharply higher following the results, including Alphabet (GOOG) (GOOGL), Pinterest (PINS), The Trade Desk (TTD), Roku (ROKU) and Digital Turbine (APPS).
Alphabet (GOOG) (GOOGL) is scheduled to report fourth-quarter results after the close of trading.
Zuckerberg said the progress Meta (META) is making on its artificial intelligence discovery engine and Reels is being seen in the strong engagement in its apps. He added the company’s management theme for 2023 is the “Year of Efficiency” and Meta (META) is “focused on becoming a stronger and more nimble organization.”
Meta (META) ended the fiscal year with 86,482 employees, including a “substantial majority” of the approximately 11,000 employees it said it would let go this past November as the company continues to right size itself.
Looking to the first-quarter, Meta (META) expects revenue to be between $26B and $28.5B, topping the $27.25B that analysts were expecting.
Meta’s CFO Susan Li said Meta’s (META) 2023 full-year expenses will be between $89B and $95B, down from a prior outlook of a range between $94B and $100B, stemming from slower payroll expense growth and cost of revenue.
A federal judge ruled on Wednesday that Meta Platforms (META) can buy virtual reality company Within Unlimited in a blow to the Federal Trade Commission.
Analysts are largely bullish on Meta Platforms (META). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha’s quant system, which consistently beats the market, rates META a HOLD.
Image and article originally from seekingalpha.com. Read the original article here.