Not all the so-called Magnificent 7 stocks have been performing that magnificently lately, but you certainly can’t say that about Meta Platforms (NASDAQ:META). The shares have been on what is now almost a two-year tear, following 2023’s 194% gains with another 60% surge in 2024.
With the social media giant readying to report Q3 earnings next week (October 30), Monness’ Brian White, an analyst placed in the top 1% of Wall Street stock experts, notes the stock has been “handily outperforming our coverage universe.” But can it keep up the momentum following the Q3 print? We’ll find out next week, but the main problem for Meta might be that it is facing some tough year-over-year comps.
The analyst thinks the company will generate revenue of at least $40.43 billion, slightly above the Street’s forecast of $40.25 billion although White’s $5.18 EPS estimate is below consensus at $5.24.
While White’s expected revenue haul represents an 18% year-over-year increase, it factors in y/y growth decelerating vs. the 22% growth seen in 2Q24, while it is also below the 23% uptick delivered in the same period a year ago.
On a quarter-over-quarter basis, the sales forecast amounts to a 3% sequential increase, “slightly below” the four-year September quarter average of a 4% gain, and weaker than the 7% QoQ increase recorded in 3Q23. For its part, Meta is calling for Q3 revenue of $38.5-41.0 billion.
Meta’s revenue mainly comes from Ad sales, and despite “tougher comps,” White is expecting “respectable Ad growth.” However, at an expected 18% y/y increase, it will be slowing down from the 22% uptick notched in Q2, and the 24% gained in the same quarter last year. Going by White’s estimates, for the current cycle, Meta’s y/y Advertising revenue growth rate peaked at 27% in 1Q24. “Essentially,” the 5-star analyst summed up, “last year’s recovery in digital ad spending, including strong demand from advertisers based in China, has created a more difficult y/y comparison, a headwind we expect will linger for the remainder of 2024.”
Ahead of the readout, then, White maintained a Buy rating on the shares along with a $620 price target. There’s a potential upside of 10% from current levels. (To watch White’s track record, click here)
The Street’s average price target is only slightly higher; at $627.02, the figure makes room for one-year returns of 11%. Most analysts remain in META’s corner; based on a mix of 42 Buys, 4 Holds and 1 Sell, the stock claims a Strong Buy consensus rating. (See Meta stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
