Meta Platforms Stock Rises. This Analyst Sees 21% Upside.

Ju raised his estimates for fiscal 2023 adjusted earnings to $14.71 from $13.96. He also raised his adjusted earnings estimates for fiscal 2024 to $16.91 from $15.36.

“With two rounds of cost cuts already announced and behind us, the
investment rationale now hinges on revenue growth outperformance,” Ju writes.

Ju believes Meta has managed to adapt to Apple’s 2021 privacy changes that necessitated user consent for advertising tracking on iPhones and iPads. He points to features like “Click-to-Message for Messenger and WhatsApp” which are ads that feature a box that customers can click to message the brands directly about the advertised products or services.

“We believe there is significant room for Meta to ramp revenue as it continues to highlight the value of both Messenger and WhatsApp to marketers,” Ju writes. “Our estimates currently reflect no increase in the number of messages per user or price per message—only ongoing user growth.”

He thinks the rollout of advertisements in Instagram search results will also be a meaningful shift for Meta.

“While details at this point are sparse, this does make us revisit the original assumptions we had been carrying in our models for search revenue when the company first mentioned Graph Search almost a decade ago,” he wrote. “This has the potential to add a new stream of high-margin revenue—potentially reaching
close to $1 billion over the next several years.”

He is also less worried about competition from TikTok, pointing to SimilarWeb data that show an uptick in recent months for Instagram minutes spent a day.

Write to Connor Smith at [email protected]