JMP Securities analyst Andrew Boone has revised his price target for Meta Platforms Inc. upward to $350 from $300, citing several opportunities for the company. Boone believes that Meta is currently benefiting from various product catalysts and is only in the early stages of capitalizing on them.
According to third-party data, engagement with Meta’s Reels content format is robust and is contributing to incremental time and impression growth. Meta’s strategic use of artificial intelligence has played a significant role in enhancing recommendations and increasing user engagement, as people are now spending more time watching content.
Initially, Reels represented a $500 million setback to Meta’s revenue in Q3 of 2022. However, Boone remains optimistic due to third-party data indicating increased engagement with businesses after watching Reels, resulting in ad-auction density growth. Boone predicts that Reels will achieve revenue neutrality with the core newsfeed by the end of this year.
Boone commends Meta’s use of AI to enhance the performance and models of its advertisements, particularly highlighting the positive feedback on Advantage+. Additionally, Meta’s emphasis on cost-cutting has impressed Wall Street, leading to lower spending expectations.
Looking ahead, Boone anticipates that Meta will further reduce its annual expense forecast when it releases its earnings on July 26. Despite these cost-cutting measures, Boone maintains a market-outperform rating for Meta shares, which have already surged by 157% year-to-date.