Meta, Google, Pinterest Hit With Price Target Cuts Ahead Of Q2 Earnings: Here's Why

Zinger Key Points
  • KeyBanc's Justin Patterson reduced price targets for Alphabet, Meta and Pinterest by about 28% on average
  • Economy, forex headwinds, softness in some verticals are among the pushbacks

As social-media stocks gear up to release their quarterly reports over the week and the next, an analyst at KeyBanc Capital Markets lowered his estimates and price targets for the big players in the space.

The Analyst: Justin Patterson reduced the price target for Alphabet, Inc. GOOGL GOOG from $153.75 to $125,

He took down Meta Platforms, Inc.'s META price target from $280 to $190.

The analyst also lowered the price target for Pinterest, Inc. PINS from $36 to $24.

Patterson has Overweight ratings on the shares of Alphabet, Meta, and Pinterest.

The Thesis: Investors are factoring in macro headwinds and forex pressure weighing down on margins, analyst Patterson said in a note.

Alphabet: Reflecting slowdowns across Search, YouTube and Cloud, the analyst lowered his 2022 and 2023 net revenue estimates for Alphabet by 4% and 9%, respectively. He also lowered his EPS estimates by 14% and 26%, despite expectations for some operating expenditure (opex) moderation.

Factors to Watch:

  • Search rate deceleration
  • YouTube revenue growth
  • Operating margin

Earnings Schedule: Tuesday, after the close

Related Link: Snap, Twitter Lead Social Media Stocks Lower Following Disappointing Q2 Earnings: What Does Near-Term Hold For This Space

Meta: KeyBanc lowered its 2022 and 2023 revenue estimates for Meta by 5% and 9%, respectively, reflecting forex headwinds and some incremental pressure in verticals such as retail. The firm also reduced its EPS estimates by 12% and 14%, respectively.

Factors to Watch:

  • Daily average users
  • Reels video engagement
  • Third-quarter revenue guidance
  • Capex and expenses

Pinterest: Factoring in the macro pressures and lower monthly average users, Patterson took down his 2022 and 2023 revenue estimates for Pinterest by 7% and 14%, respectively. The EBITDA estimates stand reduced by 7% and 21%, respectively.

Factors to Watch:

  • MAU trajectory
  • Opex trajectory
  • Updates on activist investor Elliott’s involvement

Earnings Schedule: Aug. 1, after the close

The Price Action: On Tuesday morning Alphabet’s Class C shares were down 1.75% to $106.32, Meta stock was down 2.86% at $161.89, and  Pinterest was slipping 4.01% to $17.34.

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Posted In: Analyst ColorEarningsSocial MediaPrice TargetReiterationAnalyst RatingsTechGeneralJustin PattersonKeyBanc Capital Markets
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