Facebook parent company Meta Platforms got a pair of price target increases from analysts, ahead of its second-quarter earnings report due at the end of the month. Meta stock was trading sideways early Wednesday.
TD Cowen analyst John Blackledge upped his price target for Meta stock to 600 from 530, in a client note early Wednesday. The analyst also reiterated a buy rating for Meta. He cited positive trends in a user engagement survey for Facebook and Instagram, which is also owned by Meta. The report is also positive on Meta's artificial intelligence strategy.
"Meta's AI-focus is driving revenue growth across the business, including engagement growth supported by Reels/video and AI recommendations," Blackledge wrote.
Further, Blackledge credited the company's AI push with helping to scale "business messaging tools, including new AI messaging tools which began rolling out in 2Q24 and should drive incremental advertisers to Meta's platforms."
On the stock market today, Meta stock is up a fraction at 530.23.
Meta Stock: Watching Q2 Earnings
Meta will report second quarter earnings on July 31. Analysts polled by FactSet expect Meta to post a 19.5% year-over-year increase in sales to $38.2 billion. That would mark a slowdown from the 27% year-over-year sales growth Meta recorded in its March-ending quarter. But the slowdown comes as Meta's sales are compared against stronger results from last year, analysts noted.
"While we expect decelerating revenue in 2024 as Meta laps toughening comps driven in part by China-based advertiser growth in 2023, we forecast an 11% revenue compound annual growth rate from 2024-2029," Blackledge told clients.
There is potential upside to those estimates, from paid services related to Meta's Llama AI model, AI assistants and growth from Threads, Meta's Twitter competitor, he said.
Separately, CFRA analyst Angelo Zino on Tuesday maintained a buy rating for Meta with a price target of 600, up from 540.
"Despite tougher (revenue) comparisons in the second half (Meta grew 23% and 25% in Q3 and Q4 of last year), we believe digital ad trends remain healthy and note greater AI integration is supporting higher engagement," Zino told clients.
Meta stock fell in late April because of concerns about its rising capital expenditures related to AI. But Zino Tuesday wrote that he believes "Meta is unlikely to make any major changes to (operating expenses) and capex plans when reporting Q2 results. Commentary surrounding the rollout of Meta AI will be key to monitor while Meta over time can scale AI via ramping business messaging, include ads/paid content into AI interactions, and look to better monetize Llama."
Meta Stock Adds To Breakout
Following the Q1 earnings letdown in late April, Meta stock steadily worked its way back up. That effort was capped off with a record high reached on Friday, July 5. The company's 539.91 close that day was its first time back in record high territory since early April. Shares reached another high of 542.81 on Monday.
On June 27, shares broke out from a cup-with-handle base from a 514.01 buy point, according to the MarketSurge pattern recognition tool. Meta stock's Relative Strength line has improved as well, reaching 95 out of a best-possible 99.
Meanwhile, Meta stock is on the IBD Leaderboard premium stock list. It also an IBD Tech Leader.
