Meta Platforms Reports Solid Q3 Print, But Q4 Outlook Is A Concern: 7 Analysts Dive Deeper Into Results

Shares of Meta Platforms Inc META tanked in early trading on Thursday, despite the company reporting upbeat third-quarter revenues.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

KeyBanc Capital Markets On Meta Platforms

Analyst Justin Patterson maintained an Overweight rating while raising the price target from $356 to $380.

“On the call, CEO Mark Zuckerberg stated that Meta is continuing to focus on operating efficiency, and will be deprioritizing non-AI projects to shift resources toward AI,” Patterson said in a note. “Reels is now net neutral to revenue, which is one quarter ahead of our estimate,” he added.

“Our view is Meta can remain a LDD% revenue and EPS compounder as growth initiatives (e.g., Reels, AI products) dovetail with an ongoing focus on operating efficiency,” the analyst further stated.

BofA Securities On Meta Platforms

Analyst Justin Post reiterated a Buy rating while lifting the price target from $375 to $384.

Meta Platforms reported third-quarter revenues ahead of expectations, driven by China advertiser spend, Post said.

GAAP EPS was also higher than the consensus estimates, while MAU was in line, he added.

“A blemish may have been 4Q rev. guide at $36.5-$40bn, which was wider than usual, suggests a limited upside to Street at $38.7bn, & implies 4Q deceleration, and may have pressured stock AH as Meta highlighted added volatility in ad market and temp pause in some ad campaigns around Middle East conflict,” the analyst further wrote.

Guggenheim Securities On Meta Platforms

Analyst Michael Morris reaffirmed a Buy rating and price target of $380.

Meta Platforms’ advertising growth was ahead of the consensus expectations, “with better cost control contributing to over $2bn in operating profit outperformance,” Morris wrote in a note.

“Ad impression growth again exceeded 30% while pricing pressure slowed to a 6% decline from a high-teens average decline over the previous five quarters,” the analyst stated. Management commentary suggested Reels could be a “modest tailwind” in 2024, he added.

Check out other analyst stock ratings.

Goldman Sachs On Meta Platforms

Analyst Eric Sheridan maintained a Buy rating and price target of $384.

Meta Platforms’ operating momentum continued in the third quarters, Sheridan said. While ad revenues suggest “solid re-acceleration in Q3 and mild re-acceleration in Q4,” the substantial beat on operating income margins and GAAP EPS points towards “continuation of the year of efficiency theme,” he added.

The company’s commentary also suggested “sustained focus on investments for the long-term in AI and Reality Labs,” the analyst stated.

Roth Capital Partners On Meta Platforms

Analyst Rohit Kulkarni reiterated a Buy rating, while raising the price target from $360 to $365.

Meta Platforms reported “solid” quarterly earnings with upside to both revenues and EPS, Kulkarni said. Shares came under pressure “partially due to soft start to 4Q,” he added.

“META highlighted softer ad spend at the beginning of 4Q, correlating with the start of war in Israel,” the analyst wrote. Management’s fourth-quarter guidance was wider than usual “due to ad spend uncertainty and macro volatility,” he added.

William Blair On Meta Platforms

Analyst Ralph Schackart reaffirmed an Outperform rating on the stock.

“The company’s foundational model, Llama 2, is now believed to be the leading open-source model, with more than 30 million downloads last month,” Schackart wrote in a note. “More than half of the company’s advertisers are using Advantage Plus creative tools,” he added.

The analyst further stated the company’s business messaging continued to grow, with “more than 600 million conversations between people and businesses every day across its platforms,” the analyst stated.

Needham On Meta Platforms

Analyst Laura Martin maintained an Underperform rating on the stock.

Meta Platforms reported strong revenue and earnings in the third quarter, with growth in Chinese ad demand, which was “driven by large advertisers and aided by lower shipping costs,” Martin said in a note.

“GenAI will be the largest driver of higher CapX in 2024, META stated,” the analyst wrote. “Also, AI-driven news feed recommendations increased time spent on Facebook.com and Instagram by 7% and 6%, respectively, in 3Q23,” she added.

META Price Action: Shares of Meta Platforms had declined by 3.67% to $288.54 at the time of publication Thursday.

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