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Meta Platforms (NASDAQ:META) is due to report Q2 earnings on July 27 after market close.
Heading into the print, Meta Platforms analysts are mostly pessimistic given tough comps and a softening macro backdrop.
Jefferies analyst Brent Thill slashed the price target on META stock to $275 from $310 but sees a “compelling” valuation. Thill sees “undemanding” expectations with Meta Platforms facing “first ever y/y rev decline in Q2 and guidance of mid single-digit rev growth in Q3.”
“We believe the majority of META’s headwinds (e.g. TikTok competition, macro slowdown, iOS privacy changes, shift to Reels) are well understood and were reflected in conservative guidance. In our view, the combination of an all-time low multiple (12x FY23E EPS), moderating total expense growth (lowered guide by $3B in Q1), and advertiser checks that were better than feared should support upside to the stock. Even a conservative 17x multiple on our $13.78 FY23 EPS gets us to $230+ per share, or ~40% upside from current levels,” Thill wrote in a client note.
Similarly, Credit Suisse analyst Stephen Ju slashed the price target to $245 from $273 to reflect decreased EPS estimates for 2022/2023.
“We have hence taken a more conservative 2H22 stance and forecast ad revenue growth of ~1% on a reported basis for 3Q22 (FXN +8%) and -3% for 4Q22 (FXN +3%). We have also decreased our ad revenue growth estimate for 2023 to ~11% FXN. We maintain our Outperform rating on the following: potential for better-than-expected ad revenue growth on product innovation (Facebook) Shops, Search in Marketplaces, etc.), Street models are too conservative and underestimate the long-term monetization potential of other billion-user properties like Messenger and WhatsApp, optionality for faster FCF growth on greater efficiency on content screening/security costs,” Ju said in a note to clients.
META shares are up over 1% in preopen Tuesday after closing at $167.23 yesterday.
