By Sam Boughedda
Meta Platforms Inc (NASDAQ:META) was upgraded to Buy from Hold with a $270 price target at Argus on Wednesday. The firm said it believes the social media giant's deep cost cuts will boost profitability even in an uncertain macroeconomic environment, while increased competition in the social media space, particularly from TikTok, may be diminishing.
As a result, Argus raised its 2023 GAAP EPS estimate for META to $8.21 from $7.53 and its 2024 forecast estimate to $9.43 from $8.06.
"Meta is making some of the deepest cost cuts in the Tech sector as CEO Mark Zuckerberg has dubbed 2023 'the year of efficiency,'" the firm wrote. "Cost cutting will not do much for Meta's revenue issues, which reflect macroeconomic uncertainty, the slowdown in digital advertising, and the impact of Apple's (NASDAQ:AAPL) ad tracking policy; however, the cost cuts do demonstrate prudence by management, and should improve profitability, thus giving the market what it wants."
Argus notes that competitive intensity in social media and digital advertising has increased with the remarkable growth of TikTok and Amazon's (NASDAQ:AMZN) entry into the digital advertising space, but they feel that issues at some social media companies will benefit the company.
They pointed to challenges at TikTok and Twitter as reasons why Meta, "which continues to add users to its platform," could benefit.