Meta Platforms
looked set to weather Big Tech’s latest selloff—until it didn’t. While the stock took a sudden turn lower to join its peers in the red Thursday, analysts remain optimistic about its future.
Morgan Stanley analyst Brian Nowak rates
Meta
(ticker: META) as Overweight with a $375 price target. That implies a 25% upside from the stock’s closing price Wednesday.
In a research note Thursday, Nowak projected that Meta’s earnings will rise to $20 a share by 2024, saying that Facebook Reels has untapped revenue opportunities. That’s higher than Wall Street estimates of $16.85 a share for 2024 and a major jump from 2022 earnings of $8.59 a share, according to FactSet.
The analyst added the average revenue per user for Reels is about 28% the rate of other average Meta engagement, and while that is higher than last year, it speaks to the Reels revenue opportunity yet to come.
“The fact that Reels engagement is driving incremental time spent on the platform…gives more confidence in Reels ability to drive META’s ad revenue,” Nowak added.
Despite Nowak’s bullish stance on the future of Meta, its stock was falling 1.3% to $295.26 Thursday amid a broader tech selloff. The tech-heavy
Nasdaq Composite
was dropping 1.1% and was on pace to close for its fourth straight day in the red. Investors appeared concerned about the potential for future interest rate hikes after hawkish comments from Federal Reserve officials and strong economic data this week. High interest rates put pressure on growth tech stocks as the rates reduce the value of future cash flows.
However, most analysts are bullish on Meta stock, which has soared 149% so far this year. Of the 58 analysts surveyed by FactSet, 51 say the stock is a Buy, six say it’s a Hold, and one rates it at Sell.
Write to Angela Palumbo at [email protected]
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