Meta shares jumped to an intraday record on Thursday after analysts at two firms raised their price targets on the stock, citing optimism over the company’s growing market share in digital advertising.
Analysts at Jefferies lifted their price target on Meta to $585 from $550 and said the company’s gain in the ad market will increase this year.
“Meta has too many advantages to count,” the Jefferies analysts wrote.
The decision to invest $27 billion in capital expenditures last year “has helped the company develop several strategic advantages over its peers.”
Additionally, the analysts said Meta could capture as much as 50% of incremental industry ad dollars this year, an increase from 33% in 2023.
They also predicted Meta could outgrow Amazon ‘s ad business for the first time since 2015.
For return on ad spend and AI performance, RBC said “META indicated as strongly as we’ve ever heard over GOOGL on a relative basis.”
The analysts said Meta is likely benefiting the most from any spending that’s exiting TikTok, which faces a potential ban in the U.S. Meta shares are up about 45% for the year after almost tripling in 2023.
Before selling off later in the day and closing up less than 1 percent at $510,92, the stock had risen as much as 4 points and 6 percent to a high of $530. Due in part to worries that the Federal Reserve is pushing interest rate cuts, the broader market fell on Thursday, with the SandP 500 and Nasdaq falling more than 1%.
With a view to increasing the company’s gain in the ad market this year, Jefferies analysts raised their price target for Meta from $550 to $585. The goal was raised by RBC Capital Markets analysts on Wednesday from $565 to $600. RBC, First Shanghai, and Wells Fargo have the highest estimates among the approximately fifty price targets that FactSet tracks.
Following a terrible 2022, Meta’s stock surged early in the previous year upon CEO Mark Zuckerberg’s proclamation that 2023 would be the “year of efficiency.”. The company focused on enhancing its ad business through artificial intelligence while pursuing significant cost reductions, which included the removal of thousands of jobs. Zuckerberg stated in February of this year that he planned to “keep things lean” moving forward.
The analysts at Jefferies wrote, “Meta has too many advantages to count.”. The choice to spend $27 billion on capital projects last year “has enabled the business to gain a number of competitive advantages.”. ****.
Furthermore, according to the analysts, Meta could take home up to 50% of the additional industry advertising dollars this year, up from 33% in 2023. Additionally, they forecasted that Meta would surpass Amazon’s advertising revenue for the first time since 2015.
Due to third-party sellers’ forced spending on the platform to promote their products and keep their visibility among consumers, Amazon has become a significant player in digital ads in recent years.
An analysis by RBC emphasized Meta’s increases in market share relative to those of its main competitor, Google. Google introduced Performance Max, or “Pmax,” ad campaigns a few years ago to allow brands to automate ad purchases across multiple platforms. They claimed to have observed some “advertiser resistance” to Google’s efforts to promote these campaigns.
RBC reported that “META indicated as strongly as we’ve ever heard over GOOGL on a relative basis” for return on ad spend and AI performance. ****.
The analysts predicted that Meta would gain the most from any money leaving TikTok, which could be banned in the U.S. s.
After nearly tripling in 2023, Meta shares have increased by roughly 45% so far this year.
