Why some Wall Street analysts say to consider buying the post-earnings dip in Meta Platforms
Wall Street analysts are standing by Meta Platforms despite the post-earnings sell-off, with some recommending using the pullback to scoop up the stock. "Let's be clear, there's still a lot to get excited about," said Bernstein analyst Mark Shmulik. "Reels is net neutral already, click-to message ads appears to have unlocked a whole new [total addressable market] to go after, and engagement trends continue to defy gravity. The growth story remains fully intact." The Facebook parent reported third-quarter earnings after the bell Wednesday that topped analyst expectations on the top and bottom lines and showed a 23% jump in revenue, but management offered some cautionary comments on brand advertising connected to geopolitical uncertainties in the Middle East that worried some investors. META 1D mountain Meta shares slump post-earnings Shares were last down about 4%. Despite Thursday's weakness and the ongoing uncertainties that could hamper shares in the near term, Wall Street analysts are retaining their buy rating on the stock and optimistic outlook on the social media giant's future, or recommending using the dip as a buying opportunity. "We believe Meta continues to execute well & remains disciplined, and we would be buying the pullback in Meta shares," said JPMorgan's Doug Anmuth. The analyst boosted his price target to $400 a share, reiterating his confidence in Meta's ability to balance investments in artificial intelligence and the metaverse with cost discipline. The new price target implies 34% upside from Wednesday's close. Both Citi's Ronald Josey and Evercore ISI's Mark Mahaney echoed similar sentiment in the wake of Meta's print, suggesting that investors consider buying the dip Mahaney called Meta an under-appreciated AI play, citing its ongoing focus on the "Year of Efficiency" and Reels monetization strategy among the reasons to consider owning the stock for the long-haul. "We view META as the cheapest, high-quality mega cap Tech stock out there," he wrote. While macro economic headwinds and generally weak positioning for megacap technology may weigh on the stock in the near-term, Barclays analyst Ross Sandler reiterated the company as a favorite megacap name. He expects shares to benefit from the upcoming AI product wave and ongoing cost efficiencies. To be sure, even if geopolitical concerns persist and weigh on advertising, Morgan Stanley's Brian Nowak views Meta Platforms as one of the best-positioned names to weather the volatility. "While all advertising may be impacted by geopolitical activity, advertising allocation remains a relative game and we believe META's differentiation gap is widening vs most peers," he said. — CNBC's Michael Bloom contributed reporting