Evercore ISI says Facebook is a classic dislocated high quality stock that's ridiculously cheap

Published Thu, Apr 28 20228:12 AM EDT

Facebook-parent Meta 's valuation does not reflect the stock's high-quality caliber, according to Evercore ISI. "We view the reward-risk outlook for FB shares here as truly compelling," Evercore ISI analyst Mark Mahaney said in a note Wednesday. Mahaney pointed out that Meta's stock was selling at a "ridiculous" 13 times its 2023 earnings per share Wednesday night after falling nearly 48% this year. He also noted that the company is still the "world's leading Social Media and Messaging platform." Because of this, the analyst called Meta a "classic dislocated high quality stock." Evercore ISI reiterated an outperform rating on the Meta, though the research firm trimmed its price target on the stock to $325 per share from $350. The new price target is still more than 85% above Wednesday's closing price. Shares for Meta were up 18% in the premarket Thursday after the social media company reported earnings per share that beat analyst expectations. Revenue and figures for monthly active users missed estimates, but Mahaney noted that, after adjusting the earnings figures for Covid comparables, the company's results suggest that revenue growth remains "consistent and robust." The analysts is also "increasingly confident" that Facebook will overcome macro obstacles and improve monetization of its Reels business. "What is almost certain is that as comps ease in H2:22 + Macro/Geo-Political improve + Reels monetization begins to ramp + FB's post-privacy ad attribution platform arises, that FB's Revenue and EPS Growth will strengthen and accelerate," Mahaney wrote. "And if that happens, it is extremely unlikely that FB will remain at 13X P/E. This is a Classic DHQ Opportunity. When being Long means you can benefit from Multiple Expansion AND Premium EPS Growth AND Positive EPS Revisions," he added. Other analysts gave their takes after Meta's earnings as well. Morgan Stanley analysts said in a note Thursday that they remain bullish on the company. However, Needham analysts said they are still concerned that Meta's "enormo