Shares of Meta Platforms (NASDAQ:META) soared by more than 18% on Thursday after the social media giant’s Q4 revenues beat estimates and it upped its stock buyback to $40 million.
But what got Wall Street analysts cheering the stock was Meta’s CEO Mark Zuckerberg‘s focus on cost efficiency as he termed 2023 as the “the Year of Efficiency.”
Elaborating further, the company’s management pointed out that it was going to focus on the monetization efficiency of its Reels which is still less than Facebook Feeds. Another area that META plans to improve upon is growing advertiser demand even in the face of macro uncertainties. The company plans to do this by improving ad performance and measurement tools.
In the fourth quarter, Meta’s revenues of $32.17 billion included $31.44 billion from its family of apps, which includes Facebook, Instagram, and WhatsApp. This indicates that the Family of Apps made up around 97% of Meta’s revenues.
Following the Q4 results, Rosenblatt Securities analyst Barton Crockett upgraded the stock to a Buy from a Hold and also raised the price target to $220 from $104 earlier. The analyst’s price target implies an upside potential of 43.7% at current levels.
Crockett commented, “With Meta reaching 3.74B people monthly (47% of global population), it has durability that over time could confer a premium multiple.Meta is unlevered, and following the maturing company playbook to a normal mix of debt and equity could open up meaningfully higher share repurchase.”
Even BofA top-rated analyst Justin Post approved of this “efficiency mentality” and raised the price target to $220 from $160 while upgrading the stock to a Buy from a Hold.
Post pointed out that as the “ad environment improves” META could be poised for an upside in EPS.
Meta’s better-than-expected revenues resulted in pulling up Pinterest (PINS) stock by more than 5% in pre-market trading on Thursday even as Bloomberg reported that it could be laying off around 150 employees. PINS is expected to report its earnings next week.
Analysts remain bullish about META stock with a Strong Buy consensus rating based on 27 Buys and four Holds.