Why Could Meta Stock Rise to $466?
Financial research firm Tigress predicts Meta shares could rise to $466. This means an increase of 195%. According to Tigress, the meta remains well positioned to benefit from the evolution of social trading. Also, with the commercial aspects and future monetization potential of the Metaverse.
Tigress’ analysis provides a valuable juxtaposition to Needham’s, which recently downgraded Meta shares from Outperform to Hold. The firm is lowering estimates because they believe cost growth will far outpace revenue growth over the next two years. In addition, the meta’s moat is shrinking, causing great concern for its stock. Although this argument is worth considering, Tigress’s position is quite suggestive of Meta stocks for a few reasons.
BlackRock’s iShares MSCI USA Quality Factor ETF has Meta as one of its core commodities. Meta is considered a high-quality stock with a strong balance sheet. It has soaring earnings reports and a dominant market share.
High-quality stocks like Meta can be rare performers if a recession or stagflation should occur. Risk aversion is likely to cause market liquidity to gravitate towards high-quality assets. In addition, Meta is a best-in-class asset. The presence of the firm in the technology market is not in doubt. For example, the economy’s bright net income margin of 31.2% reflects its pricing and bargaining power. This can keep the company accumulating value for its investors.
Meta Earnings
Meta’s first-quarter results revealed a 7% year-over-year increase in revenue. Daily activity for family apps across platforms increased by 6%. Ad impressions on family apps grew 15% year-over-year. According to the firm’s CEO, the firm made progress on many of the company’s key priorities this quarter. Consequently, they are confident in the long-term opportunities and growth that our product roadmap will unlock.
Despite its maturity, Meta is still considered a secular growth company. This is reflected in its five-year earnings CAGR of 31.6%. Secular growth stocks tend to avoid economic headwinds. This makes them particularly profitable investments in uncertain times.
There are big concerns that the economic contraction will erode Facebook’s ad revenue as enterprise spending shrinks. However, investors should note that the online advertising industry should grow at a CAGR of around 11% over the next few years. This categorizes the firm as a high-growth domain. Additionally, by 2023, Facebook will own 24.1% of the ad sales industry, which suggests that segment earnings may be non-cyclical.
Conclusion
Relative valuation metrics suggest that Meta’s stock is undervalued. The firm’s stock is trading below a cyclical peak. Furthermore, with a PEG ratio of 0.94x, the market highlights the company’s earnings per share growth. And that leaves a profit-based value difference in the game. Another aspect that supports the claim that Meta is valued is the firm’s cash flow statement. Meta’s free cash flow grew 102% last year. And the price-to-cash ratio is at a 58.3% discount from the five-year average. This supports the theory that the market emphasizes Meta’s cash flow is generating skills.
Finally, of the large tech stocks, Meta appears to be the most reasonably priced when measured by its price-to-earnings ratio. Thus, it stands to reason that the stock is rallying impressively from a peer analysis standpoint.
On Wall Street, Meta earns a moderate buy consensus rating based on 29 buys assigned over the past three months, based on seven holds and two sell ratings. Meta’s stock price target of $265.86 implies a 68.2% upside potential. The company has lost more than half of its market value since the beginning of the year. However, the firm’s fundamentals remain strong. Quantitative metrics suggest this is an undervalued stock. According to Tigress, the company’s shares may rise soon.
