Meta's 'Structural And Cultural Pivot' Inspires Analyst To Raise Price Target By 30%

Shares of Meta Platforms Inc META rose in early trading on Tuesday, with analysts predicting a rally.

The company’s “year of efficiency” marks a “structural and cultural pivot” to increase productivity and have leaner operations, with a greater focus on investor returns, according to Morgan Stanley.

The Analyst: Brian Nowak upgraded the rating for Meta Platforms from Equal-Weight to Overweight, while raising the price target from $190 to $250.

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The Thesis: The Facebook parent company is now focusing on increased efficiency and improving revenue, engagement and Reels trend, Nowak said in the upgrade note.

“Despite META having risen ~120% off the November 2022 bottom (vs. ~6% for S&P), valuation still looks attractive, trading at a ~33% discount to peers on a growth adjusted basis and ~14X '24 META EPS, a 30% discount to META's long-term average,” the analyst wrote.

Even if ad growth weakens in the back half of 2023 and 2024, Meta Platforms is the “most durable mega cap” and is better positioned than Alphabet Inc GOOGL, which has not aggressively reduced costs, and Amazon.com, Inc. AMZN, “where retail profitability improvement is partially predicated on growing consumer spend and macro uncertainty could push out the AWS growth improvements,” he added.

META Price Action: Shares of Meta Platforms had risen by 1.30% to $202.38 at the time of publication Tuesday.