BofA Securities analyst Justin Post maintained a buy rating on Meta Platforms Inc META with a price target of $630.
Meta’s third-quarter earnings will likely beat expectations with revenue of $40.4 billion and EPS of $5.35, slightly above Street estimates of $40.2 billion and 5 .19 dollars, respectively, according to Post.
This growth is driven by several factors, including new AI tools and CRM integration, which improve return on investment (ROI) and increase ad spend.
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Monetization of messages and reels is accelerating, and a modest profit of 100 to 200 basis points from political ad spending is expected.
Post noted that Meta could cut the top end of its 2024 spending guide by $1 billion, from $98.2 billion to $96 billion, or $98 billion, thanks to layoffs and a reduction of job offers.
Capital spending, however, could move toward the upper end of the forecast, between $37 billion and $40 billion, as Meta continues to invest heavily in AI infrastructure, according to the analyst.
Revenue guidance for the fourth quarter will likely be between $45 billion and $47.5 billion, with advertising revenue growth decelerating 2 points to 16% year over year, he noted.
However, according to Post, the growing benefits of AI for ad targeting, more robust use of Reels and additional political ad spending could provide a marginal benefit.
He said Meta remains well positioned in the AI space, with analysts forecasting multi-year growth opportunities, including through generative AI and infrastructure development.
Despite potential near-term volatility due to high expectations, Meta’s stock is up 63% year to date, maintaining its status as a top AI pick.
Price action: META stock is up 1.23% at $582.21 at last check Tuesday.
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