Meta Founder and CEO Mark Zuckerberg speaks during the Meta Connect event at Meta headquarters in Menlo Park, California on September 27, 2023.
Josh Edelson | AFP | Getty Images
Meta shares rose 4.6% on Thursday to a record high after analysts at two companies raised their price targets on the stock, citing optimism about the company’s growing market share in digital advertising .
Analysts at Jefferies raised their price target to $585 from $550 and said Meta’s gains in the advertising market would increase this year. Analysts at RBC Capital Markets raised the target from $565 to $600 in a note published Wednesday. Among the 50 or so price targets tracked by FactSet, RBC’s estimate is tied with Wells Fargo and First Shanghai.
After a brutal 2022, Meta shares have soared since early last year, when CEO Mark Zuckerberg said 2023 would be “the year of efficiency.” The company has made significant cost cuts, including cutting thousands of jobs, and has focused its investments on improving its advertising business using artificial intelligence. Zuckerberg said in February this year that he intended to “keep things simple” in the future.
“Meta has too many benefits to count,” Jefferies analysts wrote. The decision to invest $27 billion in capital expenditures last year “helped the company develop several strategic advantages over its peers.”
Additionally, analysts said Meta could capture up to 50% of the industry’s incremental ad dollars this year, up from 33% in 2023. They also predicted Meta could outgrow its size. Amazonadvertising activity for the first time since 2015.
Amazon has become a major player in digital advertising in recent years, as third-party sellers have been forced to spend heavily on the platform to promote their products and maintain visibility among consumers.
In the RBC report, the company’s analysts highlighted Meta’s market share gains compared to its main rival. Google. They said they had seen some “advertiser resistance” to Google’s efforts to promote its Performance Max or “Pmax” ad campaigns, which the company introduced a few years ago to allow brands to automate ad buys on multiple platforms.
Regarding return on ad spend and AI performance, RBC said that “META indicated as strong performance as we’ve ever heard on GOOGL on a relative basis.”
Analysts said Meta would likely benefit the most from any spending leaving TikTok, which faces a potential ban in the United States.
As of mid-afternoon Thursday, Meta shares were up 2% at $517.30. They are up around 46% over the year, after almost tripling in 2023.
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