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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