Sell-side on Meta (META) post-earnings: Plethora of PT's lowered but plenty see an attractive buying point

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  Barclays lowers PT to USD 520 (prev. 550) and keeps an 'Overweight' rating. Said it "would let the dust settle on the tone shift here before adding to positions," but says it didn't hear anything on earnings call "that causes major concern."


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  Goldman Sachs lowers PT to USD 500 (prev. 555) and keeps a 'Buy' rating. Solid Q1 operating report that was punctuated by strong revenue trends, but its forward commentary was framed around decelerating revenue in Q2 and a stepped-up investment cycle which caused both FY24 total GAAP expense and capex guided ranges to be moved higher.


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  JPMorgan lowers PT to USD 480 (prev. 535) and keeps an 'Overweight' rating. Says despite the known concerns surrounding the report, JPM still projects double-digit revenue and earnings growth in 2025 and 2026 as Meta has a strong track record of driving returns on increased spending.


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  Citi lowers PT to USD 550 (prev. 590) and keeps a 'Buy' rating. Adds many have alluded to, says the key debate coming out of earnings is likely to be around the size and scale of Meta's multi-year generative AI investment cycle. Citi said it would take advantage of any dislocation in shares, though it dropped the PT /given uncertainty around Meta's investment cycle.


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  Wolfe Research lowers PT to USD 500 (prev. 530) and keeps an 'Outperform' rating. Believes META's near-term investments "should create plenty of monetization opportunities over time both from existing offer and new offerings" and it says Meta's bull case remains intact.


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  Redburn Atlantic lowers PT to USD 470 (prev. 500) and keeps a 'Neutral' rating. Said it delivered a "decent set" of results and for a few reasons leaves it very well positioned to capitalize on the AI opportunity.


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  UBS lowers PT to USD 575 (prev. 610) and keeps a 'Buy' rating. With the stock having pulled back 15% after hours to ~ USD 420, investors are likely fearing that 2025 EPS may be closer to USD 20 vs ~USD 25, but UBS thinks the only set of circumstances that may result in that scenario is an unlikely, self-induced AI/chat-based pivot in a repeat of the Newsfeed/Stories to Reels transition.


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  Mizuho keeps a 'Buy' rating with PT of USD 575. Biggest surprise from earnings is that the Co. will be in an investment cycle for the foreseeable future, but its long-term fundamentals remain unchanged.


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  Morgan Stanley keeps an 'Overweight' rating with PT of USD 550. Firm sees an attractive buying opportunity.


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  Canaccord lowers PT to USD 575 (prev. 610) and keeps a 'Buy' rating. Said with several growth drivers that could support upside to 2024-2025 estimates remaining fully intact, and the revenue multiple compressing after hours, they see this sell-off as an attractive buying opportunity.


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  Wells Fargo lowers PT to USD 593 (prev. 600) and keeps an 'Overweight' rating. States that while the after-hours stock move feels overdone, given lack of estimate changes, stock appears to lack tangible near-term catalysts.


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  TD Cowen lowers PT to USD 530 (prev. 590) and keeps a 'Buy' rating. Posted solid Q1 result but Q2 guidance was a bit light and noted mgmt. also raised CapEx and OpEx guidance, reflecting ramping AI infra investments.


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  Stifel lowers PT to USD 550 (prev. 588) and keeps a 'Buy' rating. In addition to the known thoughts, Stifel says the biggest question is whether META can meaningfully monetise AI over time to justify the investment cycle and though "history suggests" it can, the firm says it is likely to "take a bit to have a definitive answer."


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  Roth MKM raises PT to USD 510 (prev. 500) and keeps a 'Buy' rating. Discloses that investor expectations were fairly high heading into earnings, though the firm also believes that Meta shares should be bought on weakness.


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  Jefferies lowers PT to USD 540 (prev. 585) and keeps a 'Buy' rating. Says 'buy the Zuck shopping cart dip'.


• JMP Securities lowers PT to USD 525 (prev. 550) and keeps a 'Strong Buy' rating. 


• Bernstein lowers PT to USD 565 (prev. 590) and keeps an 'Outperform' rating.


• KeyBanc lowers PT to USD 475 (prev. 555) and keeps an 'Overweight' rating.


• Baird lowers PT to USD 500 (prev. 525) and keeps an 'Outperform' rating.


• Oppenheimer lowers PT to USD 500 (prev. 585) and keeps an 'Outperform' rating.


• RBC Capital lowers PT to USD 570 (prev. 600) and keeps an 'Outperform' rating.

Reaction details (13:33)

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  META -16% after-hours as despite Q1 metrics beating, it is lower on mgmt. now projecting higher total expenses and CapEx in 2024, largely due to increased investments in AI.

Analysis details (13:38)

• Detailed earnings:


• Q1 2024 (USD): EPS 4.71 (exp. 4.32), Revenue 36.46bln (exp. 36.16bln). KEY METRICS: Average family service users per day 3.24bln (exp. 3.16bln), +7.3% Y/Y; Advertising sales 35.64bln (exp. 35.57bln); Family of apps sales 36.02bln (exp. 35.53bln), +27%; Reality labs 440mln (exp. 494.1mln); Ad impressions +20% (exp. 17%); Average price per ad +6%; CapEx 6.72bln (exp. 8.3bln). GUIDANCE: Q2 revenue 36.5-39bln (exp. 38.38bln). FY24 CapEx 35-40bln (exp. 34.73bln), and also expects CapEx to increase in FY25 (exp. 37.73bln) as it invests aggressively to support AI research and product development efforts. Raises FY total expenses view to 96-99bln (exp. 96.53bln, prev. 94-99bln). Cites higher capex plans to support its "ambitious AI research and product development efforts". CEO: Said initial roll out of Meta AI is going well and making it available for some English-speaking countries, adds even with shifting existing resources to focus on AI, will grow investment meaningfully before we make much revenue.

25 Apr 2024 - 13:38- EquitiesResearch Sheet- Source: Newsquawk