The glean is off Temu and Shein and that is good for Facebook (META Stock Quote, Chart, News, Analysts, Financials NASDAQ:META).
So says Roth MKM analyst Rohit Kulkarni, who in a research update to clients October 11 maintained his “Buy” rating and raised his price target on META from $550.00 to $620.00.
“We remain bullish on META’s medium-term and long-term prospects, however, we have an incrementally cautious stance heading into 3Q earnings,” the analyst wrote. “Three reasons: our channel checks were mixed for META; our survey plus analysis implies pullback from Chinese e-commerce advertisers; and we believe buyside expectations for a clean beat and raise quarter have minimal margin of error.”
Kulkarni thinks META will post EPS of $21.29 on revenue of $161.4-billion in fiscal 2024. He expects those numbers will improve to EPS of $24.26 on revenue of $183.3-billion in fiscal 2025.
“QoQ growth in ad spend in META’s APAC segment is based on customer HQ address. During 2Q23 and 3Q23, APAC revs increased by $1.26bn and $1.24bn respectively, and we estimate Temu/Shein accounted for >$1.5bn of this incremental spend,” the analyst added. “During 2Q24, APAC-based customer ad spend increased by $0.66bn, or a 50% decline vs. QoQ growth in 2023. We believe this decline is largely attributable to pullback in ad spend from Temu/Shein. Furthermore, recent 2Q revenue miss and slower growth in marketing spend at Pinduoduo, owner of Temu, likely hints at soft ad spend in 3Q/4Q”.
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