By Vlad Schepkov
BofA Securities analyst Justin Post reiterates a “Buy” rating on Meta Platforms (NASDAQ:META) and calls the company a “top recession stock in the internet group," voicing strong support for the shares of the troubled social media giant.
In his most recent note on the company, the analyst highlights several key factors that make Facebook, Instagram, and WhatsApp’s parent better prepared for the much-feared economic downturn:
- Healthy margins “that should minimize cash flow concerns”
- Significant cash on hand “to take advantage of stock dislocations with buybacks”
- Greater cost and expense flexibility than peers
The report further notes the company’s efforts to address key investor concern - the slowing revenue growth – citing META’s internal memo, where management “laid out six investment focus areas for 2H, including: Metaverse, Artificial Intelligence, Messaging, Reels, Monetization and Privacy changes.” BofA Securities is bullish on the initiatives and sees those as “incremental revenue drivers” in second half of 2022.
Lastly, the analyst cites recent underperformance driven by “lower expectations (post-IDFA headwinds, Snap’s miss, and recent management comments)” and the resulting “2023E P/E discount to the S&P” as positives that skew the risk/reward into META’s favor.
BofA Securities reiterates a “Buy” rating on the stock and maintains $233 price target, implying nearly 50% upside from Friday’s closing price of $160.03.
Shares of the world’s largest social media company have taken a lot of heat in 2022 – down nearly 53% YTD – battered by slowing revenue growth, declining user base, and growing competition.