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Analysts raise targets on Meta Platforms on better-than-expected cost guidance

Published 03/15/2023, 06:27 AM
Updated 03/15/2023, 06:38 AM
© Reuters.  Analysts raise targets on Meta Platforms (META) on better-than-expected cost guidance

By Senad Karaahmetovic

Meta Platforms (NASDAQ:META) shares closed 7.25% higher yesterday after the company announced fresh job cuts. The metaverse-focused company expects these actions will help it save $3 billion in operating expenses this year.

“In our Year of Efficiency, we are focused on canceling projects that are duplicative or lower priority and making every organization as lean as possible,” CEO Mark Zuckerberg wrote in a memo to staff.

Meta plans to slash 10,000 jobs and eliminate additional 5,000 open roles that it hasn’t yet hired.

What analysts are saying about Meta stock

Here are some comments from Meta analysts.

Stifel analysts (raise PT to $230): “We're lowering our total expenses for 2023 and 2024, but also marginally lowering our revenue growth assumptions, as we anticipate some level of disruption given the April and May timing of the bigger component of these changes. We reiterate our Buy rating.”

Evercore ISI analysts (raise PT to $305): “We continue to like the fundamental set-up on META. And we continue to love the valuation set-up, with META now trading at an intrinsically very attractive 12X P/E on our FY24 estimate. META remains our #1 Long in the ‘Net sector.”

Oppenheimer analysts (raise PT to $260): “We are increasing both FY23E/FY24E EBITDA by 12% and FY23E/FY24E EPS ex-one time items by 22%/24%. Target based on 18x '24E EPS ex-one time items or 10x '24E EBITDA.”

Citi analysts (raise PT to $260): “We note Meta has grown its headcount from 45K employees in 2019 (+26% Y/Y) to 86.5K (+20% Y/Y) in 2022, while revenue growth decelerated from +30% Y/Y ex-FX in 2019 to +4% Y/Y ex-FX in 2022. When adjusting headcount for the most recent RIF, we believe Meta ends 2023 with ~65.5K employees and in 2024 we project revenue growth of +12% Y/Y compared to 3% headcount growth.”

Wolfe analysts (raise PT to $230): “We view these initiatives as substantial efforts to improve, not only the NT cost structure, but also set META up for more efficiencies LT. META's EBITDA margin has declined by ~14-pts to 43% in FY22 vs. FY19, largely due to FRL investments, but the recent efforts should help recoup some margin loss on a sustained basis.”

Meta shares are down 1.4% in pre-market Wednesday.

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