Meta Can Easily Return To 30%+ Operating Margin Profile By 2024, Analyst Says

Shares of Meta Platforms Inc META rose on Tuesday, after Morgan Stanley upgraded its rating on the stock.

CPMs (cost per 1,000 impressions) are showing signs of improvement, driven by a combination of factors including the company’s product ramps, less severe forex headwinds, and an improvement in ad spend, according to KeyBanc Capital Markets.

The Meta Platforms Analyst: Justin Patterson upgraded the rating for Meta Platforms to Overweight, while keeping the price target unchanged at $240.

The Meta Platforms Thesis: With CPMs improving, the company’s operating margins could expand to at least 31% by 2024, Patterson said in the upgrade note.

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“Taking the cost cuts and pricing dynamics together, we see Family of Apps (FoA) margins returning to 40%+ (i.e., 2019 levels) by 2024. Even without Reality Labs (FRL) losses narrowing meaningfully, we believe this provides ample room to return Meta to a 30%+ operating margin profile,” the analyst wrote.

“While we are still working through some checks, we suspect Meta likely benefits from any near-term reallocation of TikTok budgets,” he added.

META Price Action: Shares of Meta Platforms were up 0.32% to $202.86 on Wednesday at the time of publication.

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Photo: Courtesy of Anthony Quintano on flickr