Proactive Investors - Analysts at Oppenheimer hiked their price target on Meta Platforms Inc's (NASDAQ:FB) shares to $235 from $220 on higher advertising estimates, citing artificial intelligence (AI) investments as the force now driving improved targeting.
In a note to clients, Oppenheimer which has an “Outperform” rating on Meta, said it had raised estimates on improved targeting and attribution capabilities from Meta Advantage+ and SKAN “reaching critical mass.”
“Per our conversations at Digiday's Media Buying Summit, advertisers have begun seeing 28 days attribution windows versus the previous seven days and with the launch of Advantage+ META is beginning to drive better targeting post-App Tracking Transparency (ATT),” said Oppenheimer’s analysts.
READ: Meta Platforms price target raised to $220 from $145 by Oppenheimer
Advantage+ uses machine learning to test variations of ads and distributes the best-performing versions, continuously altering ad content. Fifteen A/B tests showed Advantage+ drove 12% lower cost-per-conversion, compared to non-Advantage+ ads, with one agency noting that clients see $7 in returns for $1 spending.
Oppenheimer noted that Facebook (NASDAQ:META) and Instagram’s share of spend is “stable/increasing,” with attribution getting better, as advertisers are using more internal data to prove return on investment; and updates now allow a 28-day attribution window (SKAdNetwork 4.0).
“TikTok analytics/attribution getting better, cited as the easiest platform to work with. Limited mention of SNAP. Twitter budgets shifting to Facebook/Instagram,” said the analysts.
“We are therefore increasing our '23/'24 ad revenue by 2% driving EBITDA 4% higher while increasing GAAP EPS by 8%/7%. We note that while '23 revenue estimates are still slightly below consensus, our '24E revenue is now 2% above. Separately per Bloomberg, META is planning another round of layoffs, which could drive an upside to '23 expense guidance.”
Meta is the world’s largest social networking company, with 3.7 billion monthly users across all properties.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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