According to Piper Sandler, investors can have greater confidence in Meta Platform’s outlook. The firm’s analyst, Thomas Champion, raised his price target on Facebook’s parent company on Wednesday. Champion stated that the social media firm has been strengthening its Reels and building out its artificial intelligence (AI) strategy. He also noted that Meta continues to be his top pick in digital advertising.
Champion’s bullish thesis is partly driven by recently growing user time in Meta’s social media platforms, including rising impressions in Instagram Reels in the second quarter. He expects impressions, or the number of times a piece of content is seen, could jump about 30% year over year. Meanwhile, Meta’s AI strategy is helping increase the time users spend on its platforms, improving its suite of tools for advertisers and building out an AI ecosystem.
Meta Shares Have Already Doubled This Year
Meta shares have already doubled this year, higher by 125%. The likelihood of a pause in interest rate hikes buoyed the outlook for mega-cap tech stocks. Piper Sandler’s analyst has a $310 price target, raised from $270, which implies 14% upside from Tuesday’s closing price of $271.32.
Positive Outlook for Meta’s AI Investments and New Products
Piper Sandler was not the only Wall Street firm hiking its price target on Meta. Wolfe Research also raised its price target to $330, from $300, implying that Meta can rise 21% from Tuesday’s close. Analyst Deepak Mathivanan reiterated his outperform rating, saying the firm’s generative AI plans could “potentially benefit top-line growth over the next few years.”
Champion wrote, “META is just now beginning to re-gain market share after ~2 years of declines. We think AI investments, new product growth (Reels), TikTok issues, and adtech investments set the stock up well for 2H23 & into ’24.”
Meta’s Pricing is Weaker, but Spend is Holding Up
Piper Sandler’s Ad Metrics data suggests that Meta’s pricing is weaker, but spend is holding up. Champion wrote, “We are now more confident in META’s re-acceleration and raise 2H23 revenue & out-year estimates. Our view: we think META is ramping Reels inventory faster than anticipated.”
In summary, Piper Sandler’s analyst has raised his price target on Meta Platform due to its strengthening Reels and building out its AI strategy. The firm’s bullish thesis is partly driven by recently growing user time in Meta’s social media platforms, including rising impressions in Instagram Reels in the second quarter. Meta’s AI strategy is also helping increase the time users spend on its platforms, improving its suite of tools for advertisers and building out an AI ecosystem. Although Meta’s pricing is weaker, its spend is holding up, and Piper Sandler expects a re-acceleration in the company’s revenue.
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