Everybody loves a comeback story. And Facebook parent-company Meta Platforms could be the next battered stock to make a recovery, according to analysts on Wall Street. The tech sector got crushed in 2022 as investors steered clear of growth in the face of a hawkish Federal Reserve. The tech-heavy Nasdaq Composite tumbled a whopping 33% , with big technology stocks like Tesla , Meta and semiconductor stocks among the worst performers. Fears of slowing advertising spending and a recession also weighed on tech names, and layoffs commenced as companies looked to trim spending after years of record growth and some over-hiring. META 1Y mountain Meta Platforms shares tumbled more than 64% in 2022 But tech stocks aren’t out of the woods just yet. Many of last year’s problems continue in 2023, but analysts on Wall Street view Meta as one of the best stocks to weather the volatility after its 64% plummet in 2022. “We acknowledge the macro backdrop weighs on ad spending, but ultimately believe Meta should hold up better than peers due to its strong performance-based ad formats, still healthy [return on investment], & large base of 10M+ paying advertisers,” wrote JPMorgan’s Doug Anmuth in a note to clients Thursday, naming the social media stock a top internet pick for the new year. More than half of analysts say shares are a buy, with the consensus price target implying 11% upside from Wednesday’s close, according to FactSet. Wolfe Research also views Meta Platforms as a stock to buy, especially heading into fourth-quarter earnings. Analyst Deepak Mathivanan said in a Wednesday note that shares look compelling at their current valuation, and given the company’s long-term growth trajectory. He also expects the company to reiterate its operating expense and capital expenditure targets for 2023 when it reports. “Shares of META have traded up 38% from 3Q22 earnings lows (vs. Nasdaq +3%) and positioning appears to be skewed bullish currently,” Mathivanan wrote. “However, we think sustained improvement in fundamentals on both top-line and profitability over the next few months in 2023 amidst uncertain macro will be rewarded.” Barclays analyst Ross Sandler said in a note to clients that an improving narrative at Meta could even lead the stock to outperform Alphabet and Amazon as the company’s operating expenses and capital expenditures come down. He also anticipates an advertising recovery in the second half of the year to benefit shares. Part of Meta’s 2022 issues stemmed from its multi-billion dollar investment in the metaverse. Any information or commentary that rationalizes that investment case could push the stock up, according to Wells Fargo analyst Brian Fitzgerald. Optimization within its artificial intelligence driven algorithms could also benefit the company going forward, he said in a Thursday note to clients. “META recently noted a single AI advancement in scaling its recommendations models led to a 15% increase in Reels watch time,” he said. — CNBC’s Michael Bloom contributed reporting
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