Facebook parent company Meta Platforms could post 20% revenue growth this year, and Amazon could help the tech giant get there, an analyst said Monday. Meta stock gained in Monday trading.
In a new client note, a team of Mizuho analysts led by James Lee named Meta to the firm's list of top picks. The analysts reiterated a 575 price target for the social media giant. The target which implies roughly 18% upside from the closing price for Meta stock on Friday.
"Improving monetization in Reels, geographic expansion and Amazon partnership of Shops, and unified ranking to optimize video placements give us incremental confidence in our above-the-Street revenue growth of 20%," Lee wrote.
On the stock market today, Meta stock closed up by 2.6% at 496.98.
Meta Sales Expected To Accelerate In 2024
Mizuho's 20% year-over-year revenue growth estimate for Meta in 2024 is above broader analyst consensus of 17%, according to FactSet. Last year, Meta sales grew 15.7% to about $135 billion. Revenue slipped 1.1% in 2022.
Meta's sales could benefit this year from improved ad pricing for its Reels short-video product, the note said. Meta recently detailed its strategy to use generative artificial intelligence improve video recommendations across Facebook and its other apps, which includes Instagram.
But Mizuho is also bullish on Facebook Shops, the company's online storefront product for businesses. Chief Executive Mark Zuckerberg said last month that the product reached a $2 billion annual run-rate during the fourth-quarter of 2023.
In November, Meta began offering a feature allowing users to link their Amazon accounts to their accounts on Facebook and Instagram. The feature enables users to purchase products from some Amazon ads without leaving the social media platforms. Mizuho's new report said bringing "one-click shopping" from Amazon to Meta's platforms could shift user behavior.
"We believe the in-app purchase integration with the largest e-commerce company globally could represent the tipping point of transforming social media into a transaction platform, changing user behavior at scale, and shifting more retail media spending into Meta," Lee wrote.
There is a risk, however, that Meta's investments in computing chips and data centers for AI could dent some of Meta stock's upside, the Mizuho report said. But Lee wrote that Meta has "ample flexibility" to lower other costs, such as investments in metaverse products.
Meta Stock Forms New Pattern
Meta stock surged out to a 40% gain in the first two months of the year. That was helped by a huge gap up following the firm's earnings report on Feb. 1. But Meta stock has since been trading around 500 since then, helping form a three-weeks-tight pattern.
Meanwhile, Meta stock is on several IBD stock lists. That includes Tech Leaders, IBD 50, Big Cap 20 and the premium IBD Leaderboard list.
