Analysts see even more gains ahead for Meta Platforms after latest earnings report

Published Thu, Apr 27 20236:52 AM EDTUpdated Fri, May 12 202311:41 AM EDT

Analysts liked what they saw from Meta Platform 's latest earnings report. The Facebook parent earned $2.20 per share on revenue of $28.65 billion . Analysts expected a profit of $2.03 per share on revenue of $27.65 billion, according to Refinitiv. Meta also met expectations on monthly active users, and beat on daily active users and revenue per user. What's more, Meta issued optimistic second-quarter revenue guidance. The company projects revenue between $29.5 billion and $32 billion, while analysts expected sales of $29.5 billion, per Refinitiv. Shares of the social media giant rallied on the report. They were last up 11% in the premarket. META 1D mountain META rallies after earnings Analysts were quick to add to the optimistic tenor, with several large firms including Goldman Sachs and Morgan Stanley raising their price targets on Meta, and cited the growth of the company's artificial intelligence sector. "Developing more open source models (including LLMs) and helping create an open ecosystem is another area of focus as an open ecosystem should enable META to stay at the forefront and drive infrastructure efficiency over time," Morgan Stanley analyst Brian Nowak wrote on Thursday. The firm raised its price target to $300 per share from $250, representing 43% upside from Wednesday's closing price. Goldman's Eric Sheridan also hiked his price target to $300, noting Meta maintained its momentum from the fourth quarter of 2022. He said that "ad revenues (both Q1 and guidance for Q2) outperformed expectations/fears driven by both stable-to-rising user/engagement trends and continued improvement in monetization efficiency as execution around AI/automation, measurement/attribution and monetization of Reels/messaging continue to bear fruit." Citigroup followed suit, hiking its price target to $315 from $260. The new estimate represents upside of 50%. "Coming out of 1Q, we were most impressed with engagement trends due in part from Meta's AI Content Discovery engine as well as adoption of newer ad products like Advantage+, Sponsored Reels, and C2M among advertisers, the latter of which we view as a TAM expander," analyst Ronald Josey wrote. Meanwhile, Bank of America's Justin Post noted that Meta's revenue recovery can drive the next leg higher for the stock. The analyst increased his price target to $300 per share from $250. He also said that he "turned positive on the Meta AI thesis in 1Q given large GPU capex investments, and the 1Q call did not disappoint as Meta highlighted growing AI capabilities in multiple areas." Meta's first-quarter results come as the company, along with other major tech players, are moving to reduce costs. Earlier this year, CEO Mark Zuckerberg called 2023 the " year of efficiency ." Meta has also announced it will lay off thousands of employees. "Meta earnings show the company's commitment to cost discipline while driving accelerating N-T revenue growth and also continuing to invest in longer-term transformational technologies like AI and the metaverse," wrote JPMorgan analyst Doug Anmuth, who rates the stock as overweight. He also hiked his price target on Meta shares to $305 from $270, implying upside of 45.6%. RBC Capital Markets is also bullish on Meta's prospects going forward, with raised its price target to $285 per share from $225. "From here, we think further upside is still achievable on engagement share gains & ongoing conversion improvement eventually leading to incremental spend where our checks have found less follow-through to date (ie best could well be yet to come)," BC analyst Brad Erickson wrote. — CNBC's Michael Bloom contributed to this report. Correction: Analysts expected earnings per share of $2.03, per Refinitiv. A previous version misstated the estimate.