Meta Platforms: A Rebound Story with Promising Future Potential
Shares of Meta Platforms (NASDAQ: META) experienced a significant rebound, climbing nearly 400% over the past two years. While the stock is currently valued at a notable 23 times this year’s earnings estimate, analysts suggest there may still be room for further growth into 2025.
Analyst Boosts Price Target Amid Growth Potential
JMP Securities analyst Andrew Boone recently elevated the firm’s price target for Meta to $750, suggesting a potential increase of 25% from the current share price of $599. Boone holds an outperform (buy) rating on the stock, highlighting multiple factors that support a bullish outlook on Meta’s growth potential.
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Investing in Innovation: Meta’s Capital Expenditures
Over the last year, Meta Platforms has invested $30 billion in capital expenditures and is expected to continue this trend to enhance its infrastructure. The company aims to leverage its growing free cash flow and capitalize on opportunities in artificial intelligence (AI).
Analyst Boone anticipates that AI will significantly enhance Meta’s advertising services. In its most recent earnings call, Meta reported that over 1 million advertisers utilized its generative AI tools to produce more than 15 million ads in just October.
Additionally, AI may benefit Meta’s Reality Labs division, particularly with the forthcoming Ray-Ban smart glasses. Although Reality Labs recorded a substantial operating loss of $4.4 billion in Q3, Boone believes that the successful launch of these smart glasses could strengthen investor confidence in the future of this segment.
Potential Challenges Loom Ahead
One concern for Meta’s stock performance is the anticipated decline in margins and earnings growth due to an increase in infrastructure spending. Currently, analysts project earnings growth of 14% for 2025, a dip from the 21% expected for 2024, according to Yahoo! Finance.
Despite these potential challenges, if Meta Platforms continues to achieve double-digit earnings growth over the long term, the stock appears to offer tremendous value, priced at just 23.5 times the earnings estimates for 2025. This aligns with predictions of shares reaching $750 in the coming years.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
