Citi analyst Ronald Josey reiterated a Buy rating on Meta Platforms Inc
Engagement is growing with AI Content Discovery and Reels leading the way, Monetization is improving, and Josey believes the broader Online Advertising environment is stable-to-improving based on his checks and after spending time at the annual Festival of Creativity in Cannes, France.
But this is not a rising tide lifting all boats environment, the analyst notes.
Due to its improving conversion rates, Meta's investments in ad innovations and the Lo-Fi advertising environment attract advertisers to the platform.
The analyst's tracking of Sponsored Reels suggests ad loads of 17% 2Q QTD (vs. 16% in 1Q).
With revenue growth likely reaccelerating in the second half of FY23 and profitability improving, the analyst looks for shares to outperform.
Credit Suisse analyst Ross Sandler has an Overweight rating with a $320 price target on the stock.
The successful debut of Threads might point to a new phase for META whereby popular features in the four existing mega-apps could be hatched into stand-alone businesses.
The analyst remained open to the possibility of Reels, Marketplace, and other new stand-alone apps emerging.
Price Action: META shares traded higher by 3.03% at $307.30 on the last check Wednesday.
