Thomas Lyons 
Meta Platforms, the parent company of Facebook, has been impressing Wall Street with its cost-cutting measures and stabilising advertising trends. As a result, analysts have become more bullish about the company’s stock, which has surged 140% from a seven-year low in November. The recent layoffs and pledge to be more efficient have added fuel to the rally. Over two dozen brokers have increased their price targets on the stock since the second round of job cuts was announced, and analysts have pushed up Meta’s 2023 earnings per share estimate by 15% over the past three months.
While the ad business has slowed, it has at least stabilised, according to bullish analysts. Additionally, changes in Apple’s privacy policy that make it harder to target iPhone users with ads have now been in place long enough that they’re no longer affecting Meta’s year-over-year growth rate. “The catalyst for Meta’s recent rally is likely traced to both extensive cost-cutting measures and adjusting to the negative effects of Apple’s privacy changes which significantly hurt ad revenue,” said Mike Akins, founding partner at ETF Action.
Meta’s recent surge is largely attributed to recovering from being oversold, according to Akins. Analyst earnings estimates are rising along with the stock price, which means that Meta’s shares are still much cheaper than its big tech peers and the Nasdaq 100 Index. Trading at 17 times forward earnings, Meta is below its historical 10-year average of 26 times, according to Bloomberg data. In contrast, Amazon trades at 36 times, Microsoft’s price-earnings ratio is 28, Apple is at 26, and the tech-heavy gauge sells for 24 times.
Morgan Stanley’s Brian Nowak has called Meta the most durable megacap if consumer spending weakens, since the company’s cost reductions have been bolder than at peers such as Alphabet Inc. Concerns about inflation and a potential recession have squeezed ad budgets at businesses, crimping the primary revenue stream for companies like Meta, Google parent Alphabet, and Snap. However, some analysts, such as Guggenheim’s Michael Morris, are also seeing more stability in overall advertising demand.
In conclusion, Meta Platforms has impressed Wall Street with its cost-cutting measures and stabilising advertising trends, making the company’s stock look more durable in a looming economic slowdown. The company’s shares have surged 140% from a seven-year low in November, and analysts have become more bullish about the stock. While the ad business has slowed, it has at least stabilised, and changes in Apple’s privacy policy are no longer affecting Meta’s year-over-year growth rate. Analysts’ earnings estimates are rising along with the stock price, and Meta’s shares are still much cheaper than its big tech peers and the Nasdaq 100 Index.
