Meta's Restructuring Initiatives Will Create EPS Slingshot Opportunity For Revenue Growth Recovery, Analyst Says

Evercore ISI analyst Mark Mahaney raised the price target on Meta Platforms Inc META to $305.00 from $275.00 while maintaining an Outperform rating.
Meta CEO Mark Zuckerberg shared another round of downsizing. The Facebook and Instagram parent looks to downsize team strength by around 10,000 people and to close about 5,000 additional open roles, flatten its organizational structure, dump lower-priority projects, and reduce hiring rates.
Meta also slashed its FY23 operating expense guidance from $89 billion - $95 billion to $86 billion - $92 billion.
Mahaney raised its FY23 EBITDA by 4% to $61.9 billion and GAAP EPS by 6% to $11.37 to reflect the impact of the expense guidance cut.
The analyst left the $127 billion revenue outlook (up by 9% Y/Y) intact.
Mahaney estimates an FY23 adjusted operating margin of 32.6%.
The price target implies a market premium backed by his outlook of 30%+EPS CAGR and 20%+ EBITDA CAGR.
The lowered expense guidance reflects that Meta can recover growth at lower costs. It will likely create an EPS slingshot opportunity for revenue growth recovery.
The analyst estimates a robust recovery in EPS growth backed by accelerating revenue growth against a flattening cost structure.
Mahaney's ad checks improved the monetization path for Reels and added conviction over revenue recovery.
Price Action: META shares traded higher by 6.40% at $192.46 on the last check Tuesday.

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