Facebook parent Meta Platforms got hit Wednesday by price target cuts from two analysts who raised concerns over the Russia-Ukraine conflict and its impact on European economies, as well as shifts in digital advertising. Yet FB stock, which is far below its record high, edged up.
"Facebook is likely to see another rocky quarter," RBC Capital Markets analyst Brad Erickson said in a note to clients.
"Digital ad spending decisions remain in flux with many small and medium-size businesses considering new channels away from FB for the first time," he wrote. "And we detected no perceived improvement to FB's ad-targeting algorithm or performance."
Erickson lowered his price target on FB stock to 240, from 245, with a rating of outperform.
Meta reports first-quarter results on April 27. FB stock edged up 0.4%, closing at 214.99 on the stock market today.
Facing European Headwinds
Meanwhile, Oppenheimer analyst Jason Holstein cut his price target on FB stock to 305, from 375, also with an outperform rating.
"Broadly speaking," Holstein said in a note to clients, "the concern among investors relates to macro headwinds impacting European economies."
About 25% of Facebook revenue came from Europe last year. Facebook acknowledged "some softness in Europe" at a recent conference.
"One buyer said that social budgets were peaking for brand advertisers," Holstein said.
Meta gets almost all of its revenue from advertising. It's the second-largest digital ad platform in the world after Google-parent Alphabet
FB Stock Collapsed On Fourth-Quarter Earnings
FB stock collapsed by 26.4% when it reported fourth-quarter results on Feb. 2 that came in well below expectations. That was the stock's lowest level since July 2020.
The company also faces pressure from changes made by Apple to its iPhone operating system that make it harder to track advertising performance.
The February earnings report was the first since Facebook changed its name to Meta. With the rebranding, Meta declared itself a metaverse company.
When Facebook reports first-quarter results on April 27, analysts expect adjusted earnings of $2.55 a share, down 23% from the year-ago period, on revenue of $28.3 billion, up 8%.
In the previous six quarters, Facebook showed double-digit revenue growth.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
