Meta Platforms Still Suffers Apple iOS Privacy Challenges, Analyst Says While Chopping Stock Price Forecast 20%

Mizuho analyst James Lee maintained Meta Platforms Inc META with a Buy and cut the price target from $325 to $250.
His checks with leading agencies showed that the 2Q22 seasonal lift was about 33% of the average level due to macro, Apple Inc AAPL iOS privacy, and mix shift to Instagram Reels.
Several factors affected the quarter due to economic and industry issues. He believed that challenges remained in iOS privacy as agencies still optimized META’s workaround solutions.
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In addition, he saw the continued mix shift to offline and service industries as less favorable for META advertising.
Finally, the progress in Insta Reels could also negatively impact monetization near-term, he noted.
As a result, he expects Meta’s revenue growth to be -2% YoY in 2Q22 (vs. flat growth consensus), and Street expectations for 2H22 and FY23 appear aggressive at 7% and 14% YoY growth, respectively.
Therefore, he cut his FY24E EBITDA by 18% to $65 billion and price target from $325 to $250.
To offset the expected top-line shortfall, he believes that management could reduce OPEX growth guidance from 25% YoY to 18%, which he feels could mitigate the stock’s downside risk.
Price Action: META shares traded lower by 2.14% at $165.65 on the last check Monday.

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