Meta Platforms Inc. (META) PT Lowered to $555 at KeyBanc

KeyBanc analyst Justin Patterson lowered the price target on Meta Platforms Inc. (NASDAQ: META) to $555.00 (from $575.00) while maintaining a Overweight rating.

The analyst commented ,"Quarterly expectations: 1) Revenue of $36.1B (+26% y/y) and EPS of $4.69 - We are slightly below consensus revenue but above on EPS. 2) 2Q revenue guidance of $36.8B-$39.8B - This corresponds to +15-24% y/y growth. We expect a wide spread to reflect macro uncertainty and the Middle East conflict. 3) Full-year capex increased- We expect Meta to increase the range by at least $1B (and potentially even $3B) to reflect AI investments. ● Raising 2024E/2025E EPS by 2%/1%. We now project EPS of $21.38/$24.16, which reflects slight revenue increases. In turn, we lower our PT to $555 as the slightly higher EPS forecast is offset by a lower P/E multiple (23x 2025E). Given tensions with China, we believe Meta's P/E premium to Alphabet may narrow.Key factors to watch: 1) Llama - Meta continues to show progress with AI, from the expansion of Meta Assistant to the release of Llama 3. Given the progress with AI, we are curious to see how management is thinking about returns and capex. 2) Ad revenue growth - China advertiser spend remains a key focal point, particularly around Temu and increased tensions with China. We believe +20% y/y ad revenue growth is achievable in 2Q but acknowledge growth likely decelerates afterward."

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