Meta Platforms, Inc. (NASDAQ:META) is widely expected to have ended its “year of efficiency” with a flourish, with an analyst at KeyBanc Capital Markets largely upbeat about the fourth-quarter performance.
The Meta Analyst: Justin Patterson reiterated an Overweight rating on Meta shares and upped his price target by 22% from $380 to $465
KeyBanc’s updated price target is just shy of the Street-high number of Mizuho Securities at $470.
The Meta Thesis: “Meta ended the year with further momentum in its ad products, particularly Reels,” said Patterson. The analyst said the Reels short-video offering from Meta’s stable was now successfully competing with connected-TV for linear-TV budgets.
Q4 Estimates: When the Mark Zuckerberg-led company reports its quarterly results Thursday after the market close, KeyBanc expects revenue of $39.9 billion, marking 24% year-over-year growth and a 2% beat versus the consensus. The firm also left open the possibility of the company overshooting its estimates, given the strength in Reels, and Meta Advantage+. The latter is a grouping of the company’s automated ad products.
Patterson models earnings per share of $5.30, premised on much of the revenue upside seeping through to the bottom line due to his expectations that operating expenditure wouldn’t have substantially increased in the quarter. If the analyst’s expectation is met, Meta would beat consensus estimates by 8%.
See Also: How To Buy Meta (Formerly Facebook Stock
Forward Outlook: For the first quarter, Patterson expects revenue of $32.8 billion to $35.2 billion. He sees the company giving a broad guidance range to reflect Oculus Quest 3 channel trends and potential regulatory changes.
The company will likely reaffirm annual operating expenditure and capex targets of $94 billion-$99 billion and $30 billion-$35 billion, respectively, the analyst said.
Patterson also expects the Facebook Reality Labs losses to widen to $18.3 billion in 2024, up from an estimated $15.5 billion loss in 2023. The company will likely continue to see FRL as an investment area due to the recent optimism it relayed about its mixed-reality and wearable products.
Focus Areas On Earnings Call: Patterson listed the following as areas about which investors may want to get further clarity:
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