The Meta Platforms (NASDAQ:META) price target was raised to $435 from $375 per share at Bernstein on Thursday, with the firm maintaining an Outperform rating on the stock.
Analysts at the firm told investors in a note that the social media company's revenue tailwinds start with Reels.
Bernstein believes Meta is "certainly" still a good investment, noting management's "exceptional job" of rebuilding the narrative around a company that is "now the trifecta gold standard of a compounding grower + disciplined operator + AI winner."
"Meta's leaner cost base and newfound spend discipline seems to be well understood," the analysts stated. "It will also take time for investors to fully appreciate Meta as an AI winner, so don't hold your breath on AI-driven multiple expansion."
Bernstein believes that for Meta's stock to work in 2024, revenue growth needs to once again outpace the digital ad market and consensus.
In addition, they state that Street expectations point to Meta's revenue growth decelerating in 2024 tied to tougher comps, the durability of Chinese ad buyers, and macro. However, Bernstein sees Meta accelerating revenue growth this year due to 5 tailwinds: Reels, click-to-message, Advantage+/AI, China ad spend, and the increasing time spent to keep the good times rolling.
It has been mission accomplished when it comes to Reels' objective to neutralize the TikTok threat and win back user time, according to Bernstein.
"As of 3Q23, Reels is net revenue neutral, a quarter earlier than expected," the analysts wrote. "As Reels engagement hits exit velocity, Meta has shifted focus to monetization — a familiar playbook. Despite some structural challenges with short-form video, we believe Meta can increase ad load, improve conversion rates, and keep driving up engagement to the tune of ~$2B in incremental 2024 ad revenues, or 150-200bps of revenue growth."