UBS Reiterates Buy on Meta, $715 PT
UBS analyst Stephen Ju reiterated a Buy rating and $715 price target on Meta Platforms Inc. (NASDAQ: META).
“Meta announced on Wednesday that it had agreed to pay up to $18B and make app changes for teen / underage accounts to settle a lawsuit, brought on by a coalition of 29 US states, that had alleged that the company targeted and harmed young users.
We view this as the removal of a key overhang on the stock. The fine amount itself is a less punitive outcome vs the oft-repeated Big Tobacco analogy for $200B in fines.
More importantly, long-term product changes also seem more benign to us vs potentially structural changes that could have limited Meta’s ability to serve targeted ads.
We also point to Meta’s call for direct social media rivals YouTube and TikTok to adopt the product changes – which we think could come to bear given public scrutiny – and if so could neutralize any disadvantage Meta has in capturing engagement share.
We reiterate our Buy on Meta and continue to believe that EPS is likely to move up from here given multiple avenues to achieve better-than-consensus revenue growth (ramp in monetization of Business Agents or external sale of excess compute capacity).”
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