Analyst adjusts Meta stock price target with earnings…
Throughout the course of human history, the world has seen the likes of such great minds as Leonardo Da Vinci, Thomas Edison, Albert Einstein... and Ron Popeil. All right, we're just messing with you on that last one, but in all fairness, Popeil has been hailed as a marketing genius.
The inventor and founder of the direct response marketing company Ronco, Popeil gave civilization such nifty gadgets as the Veg-O-Matic, the Chop-O-Matic, the Pocket Fisherman, the Cap Snaffler, and Mr. Microphone, to name just a few "as seen on TV" items.
But, wait, there's more, which, by the way, was one of Ronco's most famous taglines.
Popeil also popularized the slogan "set it and forget it" to sell the Ronco Rotisserie oven, with the idea that you could toss your chicken into the cooker and not worry about the bird being blasted to cinders.
Related: Analyst revises Meta stock price target ahead of earnings
Analysts at Bernstein used the same line on Oct. 25 when the firm adjusted its target on Meta Platforms. Shares are up 62% year-to-date, the firm said, and Meta has replaced Google as the “set-it-and-forget-it” blue chip holding that offers a growing, healthy core business, an AI winner story with lower terminal risk, and a shareholder-friendly management team.
The setup through year-end offers a more balanced risk-reward as decent ad buyer checks, higher CPMs, or cost per thousand impressions, an advertising metric, as well as a shorter holiday shopping season, and limited guidance on key 2025 metrics, Bernstein said.
Related: Analyst reset Meta stock price target ahead of Q3 earnings
Shares of Alphabet (GOOGL), Google’s parent company, are up 18% year-to-date and 19% for the year. The company is scheduled to report third-quarter results on Oct. 29.
The firm also said that helpful foreign exchange trends are offset by weaker-than-expected ad spending from Chinese online marketplace Temu and Chinese-founded fast fashion retailer Shein. The Singapore-registered Shein saw profits fall over 70% in the first half of the year due to fierce competition from rivals such as Temu, according to a report by The Information.
Revenue growth slowed to 23% during the period, down from 40% for the full year of 2023, and profits dipped below $400 million, The Information reported, citing unnamed sources.
The slowing earnings growth adds further uncertainty to Shein’s initial public offering plan on top of regulatory obstacles. The company is preparing for a listing in London and has held talks with potential investors, after abandoning an earlier plan to go public in New York amid pushback from U.S. lawmakers, according to the South China Morning Post.
Meta Platforms is scheduled to report third-quarter earnings on Oct. 30, and analysts at Bank of America Securities said in a research note that "we expect a 3Q beat with continued ROI improvements driving strong advertiser share gains." The firm reiterated its buy rating and $630 price target. It said that it expects more evidence of AI strength, “but high expectations & potential for some fourth-quarter conservatism adds near-term volatility risk."
BofA said Meta remains the firm's top AI pick in its coverage due to data suggesting AI is driving strong core ad growth and multi-year usage growth opportunities in Generative AI, which can create new content and ideas.
While we expect positive estimate revisions post-print, expectations for a beat and higher estimates are high, and management could try to keep '25 estimates in check (via commentary on headwinds, investments, or conservatism in 4Q revenue outlook), adding some near-term volatility risk," BofA said.
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In addition, the firm said Gen-AI tools drove better ad performance for small and midsize businesses, eCommerce integrations and improving ad demand aided CPMs, and the growing traction of messaging solutions—click-to-message ads and WhatsApp Business—continues to be a tailwind.
Meta also launched a new CRM integration in the third quarter that allows advertisers to leverage more signals and real-time data to improve targeting. Initial results suggest that the integration drives a modest uplift in ROIs, BofA said.
The question for 3Q is if these positive drivers will more than offset the impact from any potential slowdown in Chinese retailer advertiser spend," the firm said.
Meanwhile, Meta Platforms and TRI Reuters (TRI) have entered a multi-year deal to allow Meta's AI chatbot access to news content for responses to current events and news questions, according to Axios, which cited sources familiar with the agreement.
“We're always iterating and working to improve our products, and through Meta's partnership with Reuters, Meta AI can respond to news-related questions with summaries and links to Reuters content,” a Meta spokesperson said.
Reuters will be compensated for its content appearing in Meta’s AI chatbot, which is accessible through Facebook, Instagram, WhatsApp, and Messenger. Links to Reuters stories will begin appearing for U.S. users on Oct. 25.
