Meta Platforms wins target raise from Roth Capital

The future is definitely looking brighter for Meta Platforms (Meta Platforms Stock Quote, Charts, News, Analysts, Financials NASDAQ:META), according to Roth Capital Partners analyst Rohit Kulkarni, who reported on the company’s latest quarterly numbers in an update to clients on Thursday. Kulkarni kept a “Buy” rating on META and increased his target price to $210.00, which at the time of his report’s publication represented a projected one-year return of 37 per cent.

Shares of social media giant Meta Platforms jumped on Thursday after the company reported fourth quarter 2022 financials, featuring revenue down four per cent year-over-year to $32.165 billion for a year’s total of $116,609 billion, down one per cent.

Founder and CEO Mark Zuckerberg noted in his comments that Facebook recently reached two billion daily active users, a new milestone.

“The progress we’re making on our AI discovery engine and Reels are major drivers of this,” said Zuckerberg in a press release. “Beyond this, our management theme for 2023 is the Year of Efficiency, and we’re focused on becoming a stronger and more nimble organization.”

Earnings for META were down 52 per cent year-over-year for the quarter to $1.76 per share, while net income was also down 55 per cent to $4.652 billion.

Kulkarni said the $32.165 billion topline was above the consensus estimate at $31.55 billion but near the top end of management’s guidance, which was between $30 and $32.5 billion. EPS at $1.76 was under the Street’s call at $2.26 per share, with one-time restructuring expenses playing a role.

The analyst said the biggest positive from the release was the lowered 2023 opex and capex guide, where the company expects operational expenditures to be in the range of $89 to $95 billion compared to the prior outlook of between $94 and $100 billion, while capex was guided to between $30 and $33 billion from the previous $34 to $37 billion. Kulkarni also noted management’s move to add a $40 billion increase to its share repurchase authorization for 2023.

“As our channel checks highlighted, Apple and TikTok headwinds are abating while WhatsApp, Reels, and Advantage+ Shopping Ads are becoming more material. The big positive surprise came from lowered spend outlook for ’23. We believe >$10 and > $12 in EPS are now in sight for ’23/’24, implying a $160/$240 downside/upside scenario,” Kulkarni wrote. “At current levels, META is our #2 Mega Cap pick, after AMZN.”