Meta Platforms (NASDAQ:META) has had its fair share of headwinds to contend with over the years, not least issues concerning user privacy and data transparency. But say what you want about the world’s biggest social media platform – with a customer base of approximately 3.88 billion monthly active users spread across its ecosystem – the company has always managed to drive user engagement across different digital mediums and find ways to improve monetization.
There’s no reason to believe the tech giant will not continue to do so, says Wedbush analyst Scott Devitt.
“With adoption across its Advantage+ product suite rising and monetization improving in newer mediums including Reels ($10B+ run rate) and click -to -message ads ($10B+ run rate) we believe Meta is well positioned against an improving backdrop for digital advertising that should support accelerating revenue growth in 2H23 and into 2024,” the 5-star analyst said.
The company is also in the midst of what CEO Mark Zuckerberg has termed its “year of efficiency.” Along with slashing the headcount by 20,000 over the past year, the efforts have resulted in “significant cost reductions.”
Now, as revenue growth “resumes in earnest” in Q3 – Devitt forecasts a 21% year-over-year uptick, up from 11% in Q2 and 3% in Q1 – the cuts will create a “clear path to continued margin expansion.” As such, as the cost savings become fully realized in the latter half of the year, the analyst anticipates the consolidated adj. EBITDA margin will reach 53% in 2023, amounting to a 1,000bps year-over-year improvement.
Looking further ahead, given its history of successfully scaling monetization through the creation and widespread deployment of innovative digital advertising products, along with its huge and “highly engaged” user base (approximately 79% daily active users to monthly active users ratio), Devitt is convinced in Meta’s ability to capture a larger share of advertising dollars in the long run.
Given all the above, Devitt rates Meta shares an Outperform (i.e., Buy) along with a $350 price target. Should that figure be met, in 12 months’ time, investors will be sitting on returns of ~21%. (To watch Devitt’s track record, click here)
Overall, Meta gets plenty of coverage on Wall Street and almost all of it is currently positive. Based on 40 Buys vs. 2 Holds, the stock claims a Strong Buy consensus rating. The average target is more bullish than Devitt will allow; at $377.27, the figure makes room for gains of 30% over the coming year. (See Meta stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.