Analysts with Truist Securities raised their price target on shares of Meta Platforms Tuesday and named the Facebook parent company among the firm's favorite picks for 2025. Meta stock was trading flat in recent action.
A team of Truist analysts led by Youssef Squali set a price target of 700 for Meta stock in a client note Tuesday, up from 650. The change was based on extending Truist's existing discounted cash flow analysis for shares of the Facebook and Instagram owner out to a sixth year, according to the note. But the analysts also published a separate note that rated Meta among their top picks for 2025. Squali called Meta the "social king that keeps reinventing itself."
"Even at 3 billion-plus daily active users, Meta's Family of Apps is seeing growth in users and engagement, reflecting sticky apps powered by improving personalization and recommendation models, and advertising solutions that are driving superior (return on spending) for marketers," Squali wrote.
On the stock market today, Meta stock is flat, last down a fraction at 623.11.
Meta's Big Spending On AI
Mark Zuckerberg-led Meta had gained 77% through the end of last week, which Trust analysts said was the top performance among the megacap stocks the firm covers.
Meta derives nearly all its revenue from advertising. The tech giant is projected to post 21% revenue growth this year, which Truist's report noted is outpacing digital ad industry growth of 15%. Squali expects Meta's revenue growth to outpace the industry again in 2025, at 15% compared to 13.5%.
Squali said improving monetization from its Reels product will help that growth. He is also bullish on the opportunity for Meta to provide AI agents for businesses.
One factor to watch is the company's spending on artificial intelligence.
"We estimate capital expenditure growth in FY25 at more than 25%, following more than 45% in FY24 by our estimate to further build up its AI capacity/capability," Squali wrote. "AI-driven recommendation and ranking algorithms are already driving higher ad conversion and pricing," he said. "And we see more runway in 2025 from the launch of successive versions of (Meta's AI product) Llama, which should power a growing roster of capabilities across agents, commerce and services," he added.
But that spending does provide at least some risk to Meta's free-cash-flow, the report added, particularly if economic conditions weaken.
Truist's other top picks were Amazon and DoorDash.
Meta Stock Near Record High
Meta stock has pulled back slightly from a record high of 638.40, which the company's shares reached Dec. 11.
Meta also notched a record high Friday for a fourth straight trading day.
Shares of the Facebook parent broke out from a flat base chart pattern with a 3.5% gain on Dec. 3 and remain in a 5% buy zone.
Meta has gained 76% year to date. The social media giant's stock has a 98 out of a perfect 99 IBD Composite Rating, per IBD Stock Checkup. It is the highest-rated stock out of 69 members in the internet content group tracked by IBD.
