03. Meta Platforms, Inc. (NASDAQ:META)
Upside Potential: 23%
On March 18, Wells Fargo & Company adjusted its price target for Meta Platforms, Inc. (NASDAQ:META), a prominent player in the technology and social media industry. The new price target was raised from $536.00 to $609.00, while the company maintained its “overweight” rating on the stock. Meta Platforms, Inc. (NASDAQ:META) operates within the dynamic and ever-evolving technology and social media sector, characterized by rapid innovation and changing user preferences. The company’s performance is influenced by factors such as user engagement, advertising revenue, and regulatory developments in the digital space. With the revised price target, Wells Fargo & Company suggests an upside potential of 23% for Meta Platforms’ stock compared to its current market price of $496.98. This indicates Wells Fargo’s optimistic outlook on the company’s growth prospects and its competitive position within the technology industry. The “overweight” rating signifies Wells Fargo’s confidence in Meta Platforms, Inc. (NASDAQ:META) ability to outperform its peers and the broader market.
Artisan Value Fund stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its fourth quarter 2023 investor letter:
“Netflix and Meta Platforms, Inc. (NASDAQ:META)—both categorized in the communication services sector—rounded out our top five contributors in Q4 as well as for 2023. Both stocks suffered sharp declines in 2022, each losing more than 50% of their market capitalizations. In 2022, we purchased Netflix and added to our position in Meta on weakness as both stocks were selling significantly below our estimates of fair value. Meta’s challenges were more self-inflicted as a ramp-up in spending caused free cash flow to plummet. We saw Netflix’s slowing subscriber growth as a normal feature of a maturing streaming market.
With regard to Meta, the company’s “year of efficiency,” as 2023 was declared by Mark Zuckerberg, involved a recalibration of its spending plans to focus on profitability. While the stock also benefited from enthusiasm around artificial intelligence, the re-rating in the price multiple seems entirely rational as shares were selling for less than 10X next year’s estimated earnings at its 2022 lows for a business that still had strong growth drivers, consistent free cash flow generation and a large net cash position. While Meta is included in the Magnificent Seven mega-cap stocks, Meta is trading much cheaper (~25X P/E) than all the others aside from Alphabet (~24X P/E), which is the one other of the Magnificent Seven stocks we hold. While Meta’s stock is no longer extremely cheap, we feel it is still reasonably priced for a good business with attractive growth prospects. We did trim our positions in Meta and Netflix to put capital to work in names having greater discounts.”
