Meta has more Wall Street fans than ever as rally approaches 300%

(Bloomberg) – For Meta Platforms Inc. Bulls, the largest single-day stock wipeout in history is a fading sight in the rearview mirror.

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The Facebook owner’s shares have nearly quadrupled since their lowest point in November last year, which came after a $251 billion collapse in February. By one measure, analysts have never been more confident of further gains.

Of the 70 analysts tracked by Bloomberg who cover the social media giant, 62 have buy-equivalent ratings on the stock. This is the highest number since the company’s initial public offering in 2012.

“We don’t think you have to be a believer in the Metaverse story to like stocks,” Stifel Nicolaus analyst Mark Kelly wrote in a note Tuesday.

Kelly, one of several analysts with a buy rating, says the investment thesis is supported by advertisers who point to the company’s unparalleled size compared to rivals, including TikTok Inc.

The overwhelming uptrend shows how well the social media giant has regained investor support since last year’s collapse.

At the time, Wall Street stocks were tumbling as the company’s sales shrank and its CEO, Mark Zuckerberg, embarked on a multibillion-dollar project to build his version of an immersive virtual world. Now, a focus on cutting costs, toning down contradictory rhetoric, and a return to revenue growth have helped allay most doubts.

Meta spending is now focused where investors want it: monitoring technology

Analysts’ expectations for Meta’s profitability continue to rise. Wall Street now expects the company to earn earnings of about $18 a share next year, up from expectations of about $10 a year ago, according to data compiled by Bloomberg.

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This does not mean that everyone is convinced that Meta is on the right track. Needham & Co’s Laura Martin is one of only two analysts with sell ratings on the stock. It believes the company’s core business is at risk due to increased competition and potential changes in mobile operating systems such as Apple’s iOS, which could hurt Meta’s ability to target users with ads.

“Tik Tok is eating them alive,” she said in an interview. Facebook does not control its distribution or content. “I don’t know how you can get a competitive advantage.”

Nancy Tengler, CEO of Laffer Tengler Investments Inc., is cautious about the stock and sees limited upside potential.

“I wasn’t really thrilled with the leadership, even though the stock price was good and they cut costs,” she said in an interview with Bloomberg TV. “You can only do that for so long.”

However, while the stock’s valuation has risen this year, at about 18 times expected earnings over the next 12 months, Meta is the cheapest of the seven largest technology and internet stocks and trades at a discount to the Nasdaq 100 and S&P 500.

Sylvia Jablonski, co-founder and chief investment officer of ETFs Defiance ETFs, is betting that Meta’s priorities are now in the right place and that the company is poised to benefit from artificial intelligence and growth in digital ad spending in the future. Years.

“I’m interested in holding shares for a long time horizon as the decade of machine learning and AI and everything related to digital growth continues to take shape,” Jablonski said.

Technical chart for today

Two darlings of the dot-com era experienced contrasting fortunes. While Microsoft. Cisco Systems Inc. has grown more than sixfold from its dot-com highs. It has not yet recovered from its historical collapse at the beginning of the twentieth century. The computer networking equipment maker’s shares are still trading about 36% below their all-time high in March 2000. Both stocks rose along with shares of other technology companies on Tuesday after the latest data on inflation was released.

The most important technology stories

• Hon Hai Precision Industries warned that revenues will decline for the third consecutive quarter, raising concerns about demand for the latest devices and consumer electronics produced by Apple.

• Huawei Technologies Co. and Xiaomi Co. Samsung led the rebound in China’s smartphone market, which shook off problems of oversupply and a faltering economy to record double-digit growth in October.

• Nvidia, the world’s most valuable chipmaker, is updating its H100 AI processor, adding more capabilities to the product that has cemented its dominance in the AI ​​computing market.

• Uber Technologies Inc. is launching a small beta program for a TaskRabbit-like service that will allow app users to hire people to complete various household tasks, part of the ride-hailing company’s effort to expand beyond driving and delivering.

Earnings on Tuesday

• Before putting it on the market

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• After sales

–With assistance from Carolyn Hyde and Ed Ludlow.

(Adds Tengler’s comment starting in eleventh paragraph.)

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