Canaccord Genuity reiterated its positive outlook on Meta Platforms (META, Financial), raising the stock's price target from $700 to $730 and maintaining a Buy rating. The company's shares are priced near a 52-week high of $638.40 and have a market capitalization of $1.51 trillion, with shares trading at $597.19.
Analysts said key growth drivers for Meta cited were artificial intelligence and business messaging. While advertising spending is expected to grow faster than any other segment in the industry, AI-powered ad creative enhancements, advanced modeling techniques, and business messaging initiatives are poised to outpace industry growth and represent new ways to generate revenue.
Meta is also committed to cost efficiency and disciplined operations. In 2024, the company will optimize its cost structure and leverage its generation-ahead operating format position to generate increased GAAP operating margin, especially as continued investments are made in generative AI and the Reality Labs division.
Meta trades for 27.96x P/E, and its forward EV/Sales multiple marginally exceeds the five-year average. This makes sense, says Canaccord Genuity, as Meta continues to have strong fundamentals and with the potential for further valuation expansion compared to its 'Mag 7' peers.
In other news, Emarketer projects that Instagram will bring more than half of Meta's U.S. ad sales and net about $32 billion by the year 2025. At the same time, Meta is grappling with problems, including a $264 million fine from Irish regulators for a data breach that affected 29 million users.
Meta also rang strong among Truist Securities, which expressed optimism about Meta's 2025 prospects while predicting big caps will outperform smaller ones.
