Analyst reset price target on Meta stock ahead of Q3 earnings

Facebook started with relatively simple ad targeting, but things got interesting when they launched the like button in 2009.

People started liking everything from their favorite dog memes to local movies and bars. Facebook soon saw dollar signs, realizing that all those thumbs up could give advertisers granular targeting options.

Now Facebook’s parent meta platforms (THE TARGET) plans to use AI advertising to drive growth. “We’re leveraging artificial intelligence to provide increased automation to advertisers,” CFO Susan Li said during the July earnings call.

Meta has updated its AI tool, Meta AI, to help advertisers create content more easily. The company recently announced that more than 1 million advertisers used its generative AI advertising tools in September, creating 15 million ads and driving a 7.6% improvement in conversion rates.

Forrester research director Mike Proulx warned that Meta should not overlook the critical role of human involvement in the advertising process.

“Let’s be clear that it’s a long way off, if ever, before CMOs simply hand over the keys to an artificial intelligence agent that will autonomously generate advertising on their behalf,” Proulx said after the quarter’s earnings II of Meta.

Advertising sales remain Meta’s main source of revenue, accounting for over 98% of total revenue.

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Optimum outlook for T3 of meta platforms

In its second-quarter earnings report in July, Meta reported earnings of $5.16 per share, beating Wall Street’s estimate of $4.73. The company generated revenue of $39.07 billion, beating expectations of $38.31 billion.

Meta provided an upbeat forecast for the third quarter, projecting revenue of $38.5 billion to $41 billion, above analysts’ $39.1 billion target.

Related: Analyst revises price target on Meta shares as Facebook parent ramps up AI spending

“We had a strong (second) quarter, and Meta AI is on track to become the most used AI assistant in the world by the end of the year,” Zuckerberg said, “We launched the first open source AI at the frontier. model, we continue to see good traction with our Ray-Ban Meta AI glasses and drive good growth in our applications.”

Advertising sales remain the company’s main source of revenue, accounting for over 98% of total revenue. Fueled mainly by Facebook and Instagram apps, ad revenue grew 21.6% in Q2 compared to the previous year.

Meta is scheduled to report third-quarter earnings on Wednesday, October 30th.

Analysts raised price target on Meta stock ahead of Q3 earnings

Meta sales continue to impress investors. UBS raised its price target on Meta Platforms to $690 from $635 on October 7, maintaining a buy rating.

Advertising budgets accelerated in August to September due to recovery in brand advertising and improving consumer sentiment, the analyst told investors in a research note issued by thefly.com. The meta also benefited from political spending, optimization and efficiency, says UBS.

Guggenheim also raised its price target on Meta to $665 from $600 and a buy rating.

Guggenheim expects investors to pay attention to fourth-quarter advertising-based revenue forecasts of $47 billion, versus the consensus estimate of $46.2 billion. Additionally, investors can look for 2025 guidance on investment spending and spending and new insights on AI investment returns, the analyst says.

Guggenheim believes Meta remains the top destination for incremental ad dollars, supported by recent channel checks and industry-wide data trends in Q3.

In August, Barclays raised Meta’s price target to $550 from $520 and maintained an overweight rating following Q2 earnings.

More Wall Street analysts:

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The analyst described Meta in a note as “the best pace of any digital advertising company with little revenue deceleration despite facing very tough compounds in the second half of 2024.”

Meta Platforms traded at $592.89 per share on October 8th. Shares are up more than 70% year to date.

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