Meta Platforms Stock Upgraded

TD Cowen analyst, John Blackledge, has upgraded the rating of Meta Platforms Inc., the parent company of Facebook, from market perform to outperform. Along with this upgrade, he has raised the target price to $345 from $220. Blackledge's optimistic outlook is supported by four key reasons.

Increased Consensus Expectations and Ad Impression Growth

According to insights gathered from discussions with advertising industry experts, there is an anticipated increase in consensus expectations for Meta Platforms Inc. It is worth highlighting that Meta's platforms, especially Instagram, have experienced a remarkable surge in spending throughout the second quarter. This substantial increase in advertising expenditure has resulted in significant growth in ad impressions, indicating a favorable momentum for the company.

Positive Momentum of Reels Ad Format and Engagement Growth

Blackledge highlights Meta's new ad format for short-form Reels content, which is experiencing strong engagement growth. The company is actively ramping up its monetization efforts for Reels, foreseeing it as a major driver of top-line growth in the coming years. This promising momentum further supports Blackledge's optimistic outlook for Meta's stock.

Confidence in Cost-Cutting Initiatives

Blackledge is confident in Meta's cost-cutting efforts, despite the current cuts. He forecasts almost $14 billion losses for Metaverse this year and anticipates more in the future. However, he sees potential for further cost reductions if management shifts direction. This confidence in cost management enhances the company's financial prospects.

Revenue Potential of Threads App

While not included in Blackledge's analysis, the newly launched Threads app holds significant potential as an incremental revenue contributor in the future. Should Meta Platforms Inc. monetize the app next year, it could generate up to $5 billion in annual revenue, according to Blackledge's calculations. This additional revenue stream further supports the overall growth prospects of the company.