Reels' Ad Surge Positions Meta As A Top Internet Pick: Citi Analyst

Citi analyst Ronald Josey reiterated a buy rating on Meta Platforms Inc META with a $385 price target.

With Reels ad loads reaching 19% QTD vs. 17% in 2Q per proprietary tracking, coupled with newer ad units, greater advertiser demand, and an improving online advertising environment, Meta is taking share of the broader online advertising market. 

Josey's tracking suggests ad loads expanded to 18% in July, 19% in August, and ~20% in September, and given that the leading SFV platform ad load is closer to mid-20%, there remains upside as engagement grows and Reels' Lo-Fi ad environment attracts more advertisers. 

The analyst is also opening a 90-day Positive Catalyst Watch ahead of Meta Connect on September 27, where he expects to hear more details about Meta's GenAI plans and results in late October. 

Meta is Josey's top pick across the Internet sector, and he would be a buyer on any material pull-back in shares.

Price Actions: META shares closed higher by 0.59% at $300.83 on Monday.