Evercore ISI Reiterates Outperform on Meta, $860 PT

Evercore ISI analyst Mark Mahaney reiterated an Outperform rating and $860 price target on Meta Platforms Inc.

(NASDAQ: META)

“What Happened?

Today, Meta agreed to settle a major legal dispute with U.S. states over allegations that Facebook and Instagram failed to adequately protect children and were designed in ways that encouraged social-media addiction.

The settlement provides for $11.66B in guaranteed payments, with up to $5.02B in additional contingent payments, for a maximum potential value of $16.68B.

Meta also agreed to impose default daily limits and nighttime blocks for teenage users, strengthen its age-assurance systems, and provide additional tools for parents and guardians, while making no admission of wrongdoing.

Importantly, while the agreement broadly resolves participating State Attorney General claims it does not eliminate Meta’s wider social-media litigation exposure, as personal-injury claims, school-district cases, and other non-AG litigation remain outstanding.

Reiterate Outperform: META shares have been materially dislocated, trading at 17X P/E (within ~10% of its trailing 3-year trough multiple) due to two overhangs – concerns over the company’s hyper aggressive CapEx plans as well as concerns over the series of recent youth-safety lawsuits.

Today’s development significantly addresses the latter. Our view all along has been that the 2nd overhang was a policy/legal challenge with a policy/settlement solution. That solution is here.

The risk and the issue may not be fully resolved, but it appears to be largely resolved.”

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