Meta Platforms, Inc. (META), headquartered in Menlo Park, California, formerly Facebook, is renowned as the world’s largest social media company with apps like Facebook, Messenger, Instagram, and WhatsApp. Valued at $1.20 trillion by market cap, the company also provides augmented and virtual reality-related products comprising consumer hardware, software, and content, helping people to move from 2D screens toward immersive experiences.
Shares of the social technology giant have outperformed the broader market considerably over the past year. META has gained 59.7% over this time frame, while the S&P 500 Index ($SPX) has risen 20.5%. In 2024, META stock is up 45.6%, compared to SPX’s 15.8% returns on a YTD basis.
Zooming in further, META’s gains over the past 52 weeks easily overshadow the S&P 500 Communication Sector SPDR (XLC). The exchange-traded fund has gained 26.5% over the past year, significantly underperforming META’s gains for the period. The stock’s YTD gains easily outshine the ETF’s 19.6% gains.
On Jul. 31, META shares rose 2.5% after the company reported its Q2 results. Its revenue of $39.07 billion beat the consensus estimates of $38.34 billion, and its EPS of $5.16 surpassed Wall Street expectations of $4.70. META expects third-quarter revenue to be between $38.50 billion and $41 billion. The company expects infrastructure costs to be a “significant driver of expense growth” in the coming year.
META’s overall performance can be attributed to its generative AI advances and investments in building artificial intelligence capacity, including data centers. Recently, META released the largest version of its Llama 3 AI models. The new Llama 3 model can converse in eight languages, write higher-quality code, and solve complex math problems, and has 405 billion parameters. The company has also introduced updated versions of its lighter-weight Llama 3 models with 8 billion and 70 billion parameters.
For the current fiscal year, ending in December, analysts expect META to report an EPS growth of 36.3% to $20.26 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 45 analysts covering META stock, the consensus rating is a “Strong Buy.” That’s based on 39 “Strong Buy” ratings, one “Moderate Buy,” three “Holds,” and two “Strong Sells.”
This configuration is slightly more bullish than three months ago, with 38 suggesting a “Strong Buy.”
Recently, UBS reaffirmed its “Buy” rating on META stock and raised the price target from $630 to $635, implying a potential upside of 33.7% from current levels.
The mean price target of $542.73 represents a 14.3% premium to META’s current price levels. The Street-high price target of $630 suggests an upside potential of 32.7%.
On the date of publication, Dipanjan Banchur did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
