Why did this analyst set a bullish price target for Facebook Co.?

Shares of Meta rose 194% last year, but Wall Street may still be underestimating parent company Facebook, Mizuho analysts said Wednesday. The company raised the target price for its shares dead (dead) from 400 to 470, saying the social media giant could beat revenue expectations this year.

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“We believe the expected FY2024 revenue growth of 13% appears conservative, considering tailwinds from product improvements, increased engagement (AI content distribution), and increased demand from Chinese advertisers,” Mizuho analyst James Lee wrote.

Mizuho's price target of 470 implies a 31% upside from Tuesday's closing Meta price. That target is among the most optimistic estimates for the company on Wall Street, according to FactSet data.

On the stock market today, Meta stock rose nearly 3% to 367.2 in morning trading.

The (second) year of proficiency?

Mizuho estimates Meta's fiscal year revenue will grow about 15% year over year in 2024 to $153.5 billion.

Furthermore, Mizuho expects the company to reduce its operating expense guidance throughout the year. He wrote to me that this would be consistent with historical trends.

Meta previously estimated that its 2024 operating expenses would fall between $94 and $99 billion. This compares to estimated expenses of $88 billion in 2023. Meta's rise last year was driven in part by layoffs and cost-cutting as part of what CEO Mark Zuckerberg described as a “year of efficiency.”

Mizuho believes a third potential catalyst for Meta is the use of WhatsApp and artificial intelligence to automate customer service. Business messaging could be Meta's “next major pillar,” Zuckerberg said in an October call with an analyst.

“Based on our estimates, we believe WhatsApp represents the greatest potential given its large user base of (over) 2 billion and scope for monetization improvements over the overall meta platform,” Lee wrote.

Meta Stock: Extended Past Buy Point

Meanwhile, gains in Meta stock extended shares beyond their previous buy point of 326.20, according to IBD Marketsmith.

Meta shares are up about 4% since the beginning of the year.

Moreover, the Meta stock is on IBD Leaderboard And a list of technology leaders.

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