Meta’s $10 billion CTM business ‘largely ignored by investors’ – analysts

By Senad Karaahmetovic

Credit Suisse analysts raised the price target on Meta Platforms Inc (NASDAQ:) to $251 per share (from $220) after factoring in the latest cost reduction initiatives.

“With two rounds of cost cuts already announced and behind us, the investment rationale now hinges on revenue growth outperformance. We highlighted two reasons for our optimism heading into the 4Q22 earnings cycle as Meta has essentially replaced the post ATT ~$10b in lost revenue with Click-to-Message,” they said in a client note.

Secondly, the analysts highlighted that Instagram recently announced that it will start to show ads within search results.

“We believe should add a new stream of high-margin revenue – potentially reaching close to $1b over the next several years,” they wrote.

Similarly, Evercore ISI analysts reiterated an Outperform rating and a $305 per share price target after a deep-dive analysis into its CTM (click-to-message) ad offerings.

“This segment, which has reached a $10B revenue run rate and is on track to soon eclipse 10% of META revenues, has been largely ignored by investors. Yet, we view CTM as further broadening META’s marketing portfolio, offering an endemic advertising solution for businesses in developing markets, and perhaps most importantly, allowing META to effectively monetize two of its largest assets – Facebook Messenger and WhatsApp – the two largest messaging apps in the world with each having 2B+ users,” they said in a note.

Meta Platforms is still a No.1 net long stock at Evercore as the analysts continue to see compelling valuation despite the YTD outperformance.