What Wall Street is saying about Meta ahead of earnings

Meta Platforms (META), the parent company of Facebook, Instagram, WhatsApp, Oculus, Threads and other brands, is scheduled to report first quarter 2024 results after market close on Wednesday, April 24 with a conference call scheduled for 5 pm ET. Here’s what to watch for:

EXPECTATIONS: Last quarter, Meta Platforms reported earnings of $5.33 per share on revenue of $40.11B, both of which beat consensus forecasts.

Mark Zuckerberg, Meta founder and CEO, said at the time: “We had a good quarter as our community and business continue to grow. We’ve made a lot of progress on our vision for advancing AI and the metaverse.”

The company said at that time that it expected first quarter revenue to be in a range of $34.5B-$37B, versus the then-current consensus of $33.83B.

Meta also initiated a quarterly dividend of 50c per share and stated that it intends to pay a cash dividend on a quarterly basis going forward, “subject to market conditions and approval by our board of directors.”

In addition, Meta announced that the company will discontinue reporting Facebook monthly active users, or MAUs, and daily active users, or DAUs.

Current consensus EPS and revenue forecasts for Meta’s March-end quarter stand at $4.32 and $36.16B, respectively, according to data from Refinitiv. The consensus EPS and revenue forecasts for Meta’s June-end quarter reported by Refinitiv stand at $4.76 and $38.29B, respectively.

TIKTOK TARGETED: In early March, Representative Mike Gallagher, the chair of the House select China committee and Representative Raja Krishnamoorthi, the top Democrat, introduced legislation joined by more than a dozen other lawmakers that would give China’s ByteDance about six months to divest popular short video app TikTok or face a U.S. ban, congressional aides were quoted by Reuters as having said. Publicly traded companies in the social media space other than Meta that could also be impacted by a U.S. ban of TikTok include Pinterest (PINS), Snap (SNAP) and Alphabet’s (GOOGL) YouTube.

After the House of Representatives on Saturday passed a revised bill requiring TikTok to cut ties to its Chinese parent ByteDance or face a ban, Michael Beckerman, TikTok’s head of public policy for the Americas, told staff in a note that TikTok plans to file a legal challenge if the White House signs a bill forcing a sale or ban of the app, according to The Information’s Kaya Yurieff. The internal memo quotes Beckerman as having said: “This is the beginning, not the end of this long process.”

TARGET HIKES: On April 4, Jefferies raised the firm’s price target on Meta Platforms to $585 from $550 and kept a Buy rating on the shares. Based on an updated market share analysis, the analyst believes Meta could capture 50% of incremental industry advertising dollars in 2024, which would be its highest ever and well above its 33% in 2023. In 2024, Meta’s advertising revenue could grow 20%, above the 9% industry average, as scaling generative artificial intelligence ad tools supplement the company’s “already best-in-class” Advantage+ product suite, the analyst added. Jefferies believe Meta’s market share gains will further accelerate in 2024. It now estimates that in 2024 Meta’s ad business could outgrow Amazon’s (AMZN) for the first time since 2015.

A week later, Piper Sandler raised the firm’s price target on Meta to $600 from $525 and kept an Overweight rating on the shares. The firm continues to see upside to numbers and remains a buyer despite the strong run in the stock. Piper forecasts $35.7B in Q1 revenue and $19.8B in EBITDA. Its checks were again positive, driven by Advantage+ and specifically Shopping. The firm sees impressions roughly in-line with Q4 2023 pricing roughly flat year-over-year.

More recently, Citi raised the firm’s price target on Meta Platforms to $590 from $525 and kept a Buy rating on the shares. The firm’s Instagram Reels advertising load tracker in Q1 expanded by 90 basis points quarter-over-quarter to 20% as engagement continues to improve. With Meta’s newer ad innovations, a new artificial intelligence video architecture, and greater overall advertiser adoption, advertiser demand for Reels continues to improve, added the analyst.

In its own preview published last week, Truist raised the firm’s price target on Meta Platforms to $550 from $525 as the firm boosted its FY24 revenue outlook for the company to $158.7B from $156.9B to reflect improving monetization after two years of compression, higher impression volume and a strengthened “must-buy status” within the digital ad ecosystem amid ongoing cookie deprecation and a volatile macro environment. Meta’s significant AI investments are also yielding better ranking and recommendation results for users and advertisers, the firm added.

MORE CAUTIOUS TAKES: In contrast to more bullish peers, KeyBanc analyst Justin Patterson recently lowered the firm’s price target on Meta to $555 from $575, though the firm keeps an Overweight rating on the shares. The firm says it enters Q1 earnings with some caution as it does not see much thesis changing on prints and sees an upward bias to capex. KeyBanc believes Meta having a wide revenue guidance range around unrest in the Middle East could alarm investors, particularly if Q1’s outperformance moderates.

Roth MKM keeps a Buy rating and $500 price target on Meta Platforms heading into the company’s Q1 results, though it is also “marginally cautious” on the stock following a 36% year-to-date run. The FY24 quarterly revenue cadence under tougher comps, incremental growth drivers, and impact from European regulations are big unresolved debates among investors, the analyst told investors.

SENTIMENT: Check out recent Media Buzz Sentiment on Meta as measured by TipRanks.