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Chicago, IL – October 28, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Meta Platforms (META - Free Report) , Alphabet’s (GOOGL - Free Report) and Apple (AAPL - Free Report) ,
Here are highlights from Monday’s Analyst Blog:
Pre Q3 Earnings: Is Meta Platforms a Must-Have?
Meta Platforms is set to report its third-quarter 2024 results on Oct. 30.
It expects total revenues between $38.5 billion and $41 billion for the third quarter of 2024.
The Zacks Consensus Estimate for third-quarter revenues is pegged at $40.16 billion, indicating an increase of 17.62% from the year-ago quarter’s reported figure.
The consensus mark for earnings stands at $5.17 per share, up a couple of cents over the past 30 days, suggesting growth of 17.77% from the figure reported in the year-ago quarter.
Meta Platforms’ earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 12.61%.
Let’s see how things have shaped up for the upcoming announcement.
Strong Advertising to Aid META’s Q3 Results
META is riding on strong advertising revenue growth prospects. In the second quarter of 2024, advertising revenues increased 21.7% year over year to $38.33 billion, accounting for 97.9% of revenues. At constant currency, advertising revenues increased 23% year over year.
Meta Platforms’ advertising revenues are expected to benefit from strong spending by advertisers as they leverage its growing AI prowess.
The Zacks Consensus Estimate for third-quarter 2024 advertising revenues is currently pegged at $39.38 billion, suggesting 17.04% year-over-year growth.
Meta Platforms’ offerings — WhatsApp, Instagram, Messenger and Facebook — currently reach more than three billion people daily. Their staggering reach and increasing ad impressions (up 10% year over year in the second quarter of 2024) make META one of the most important players in the digital ad sales market, apart from Alphabet’s Google and YouTube.
META has been leveraging AI and machine learning to boost the potency of its social-media offerings, including WhatsApp, Instagram, Facebook and Threads. Effective usage of AI has been helping the company keep its users engaged. AI-driven feed recommendations have been a key catalyst.
However, rising expenses related to investments in developing more advanced models and AI services are expected to keep margins under pressure. The Reality Labs business continues to burn cash, which doesn’t bode well for META’s near-term prospects.
META Shares Outperform Sector, Industry
META shares have gained 60.4% year to date (YTD), outperforming the Zacks Computer & Technology sector’s return of 25.3% and the Zacks Internet Software Industry’s 21.3%.
Meta Platforms shares have also outperformed most of its “Magnificent 7” peers, including Apple, Alphabet, Amazon, Microsoft and Tesla YTD. NVIDIA is the only Magnificent 7 stock that has outperformed META shares over the same timeframe.
Apple, Alphabet, Amazon, Microsoft, and Tesla shares have returned 19.8%, 16.5%, 22.7%, 13% and 4.9%, respectively. NVIDIA shares have appreciated 183.6% YTD.
Meta Platforms stock is not so cheap, as the Value Score of C suggests a stretched valuation at this moment.
In terms of the forward 12-month Price/Sales ratio, META is trading at 7.96X, higher than the broader sector’s 6.14X and the industry’s 2.67X.
META Leverages AI to Boost Growth
AI is heavily dependent on data, of which META has a trove, driven by its more than 3.2 billion daily users. Meta Platforms has been leveraging AI to improve the potency of its platform offerings, including WhatsApp, Instagram, Messenger and Facebook.
META’s growing footprint among young adults, driven by improving recommendations, boosts its competitive prowess. AI usage is making it a popular name among advertisers. This is expected to drive top-line growth.
An expanded portfolio with the launch of a cheaper Quest 3S headset, Orion Augmented Reality glasses, new AI features for Ray-Ban Meta glasses and new multimodal features for Meta AI is a noteworthy development.
The cheaper Quest 3S offers the same mixed reality experience and fast performance as the Meta Quest 3. META also dropped the price of the Quest 3 512 GB version. These developments are expected to improve META’s competitive prowess against Apple’s AR device, Vision Pro.
Expanding integrations with Spotify and Amazon Music, as well as new partnerships with Audible and iHeart, are expected to enhance the experience for Ray-Ban Meta AR glass users.
Despite concerns over the monetization of its AI services in the near term and extending regulatory concerns, META’s growth prospects are huge, driven by the growing adoption of its services. A Growth Score of B reflects this enormous opportunity for investors.
Conclusion
META’s use of AI bodes well for its near-term and long-term prospects. Despite a stretched valuation and growing regulatory concerns, we believe Meta Platforms’ robust service offerings make the stock too attractive to ignore.
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Meta, Alphabet's and Apple
For Immediate Releases
Chicago, IL – October 28, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Meta Platforms (META - Free Report) , Alphabet’s (GOOGL - Free Report) and Apple (AAPL - Free Report) ,
Here are highlights from Monday’s Analyst Blog:
Pre Q3 Earnings: Is Meta Platforms a Must-Have?
Meta Platforms is set to report its third-quarter 2024 results on Oct. 30.
It expects total revenues between $38.5 billion and $41 billion for the third quarter of 2024.
The Zacks Consensus Estimate for third-quarter revenues is pegged at $40.16 billion, indicating an increase of 17.62% from the year-ago quarter’s reported figure.
The consensus mark for earnings stands at $5.17 per share, up a couple of cents over the past 30 days, suggesting growth of 17.77% from the figure reported in the year-ago quarter.
Meta Platforms’ earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 12.61%.
Find the latest EPS estimates and surprises onZacks Earnings Calendar.
Let’s see how things have shaped up for the upcoming announcement.
Strong Advertising to Aid META’s Q3 Results
META is riding on strong advertising revenue growth prospects. In the second quarter of 2024, advertising revenues increased 21.7% year over year to $38.33 billion, accounting for 97.9% of revenues. At constant currency, advertising revenues increased 23% year over year.
Meta Platforms’ advertising revenues are expected to benefit from strong spending by advertisers as they leverage its growing AI prowess.
The Zacks Consensus Estimate for third-quarter 2024 advertising revenues is currently pegged at $39.38 billion, suggesting 17.04% year-over-year growth.
Meta Platforms’ offerings — WhatsApp, Instagram, Messenger and Facebook — currently reach more than three billion people daily. Their staggering reach and increasing ad impressions (up 10% year over year in the second quarter of 2024) make META one of the most important players in the digital ad sales market, apart from Alphabet’s Google and YouTube.
META has been leveraging AI and machine learning to boost the potency of its social-media offerings, including WhatsApp, Instagram, Facebook and Threads. Effective usage of AI has been helping the company keep its users engaged. AI-driven feed recommendations have been a key catalyst.
However, rising expenses related to investments in developing more advanced models and AI services are expected to keep margins under pressure. The Reality Labs business continues to burn cash, which doesn’t bode well for META’s near-term prospects.
META Shares Outperform Sector, Industry
META shares have gained 60.4% year to date (YTD), outperforming the Zacks Computer & Technology sector’s return of 25.3% and the Zacks Internet Software Industry’s 21.3%.
Meta Platforms shares have also outperformed most of its “Magnificent 7” peers, including Apple, Alphabet, Amazon, Microsoft and Tesla YTD. NVIDIA is the only Magnificent 7 stock that has outperformed META shares over the same timeframe.
Apple, Alphabet, Amazon, Microsoft, and Tesla shares have returned 19.8%, 16.5%, 22.7%, 13% and 4.9%, respectively. NVIDIA shares have appreciated 183.6% YTD.
Meta Platforms stock is not so cheap, as the Value Score of C suggests a stretched valuation at this moment.
In terms of the forward 12-month Price/Sales ratio, META is trading at 7.96X, higher than the broader sector’s 6.14X and the industry’s 2.67X.
META Leverages AI to Boost Growth
AI is heavily dependent on data, of which META has a trove, driven by its more than 3.2 billion daily users. Meta Platforms has been leveraging AI to improve the potency of its platform offerings, including WhatsApp, Instagram, Messenger and Facebook.
META’s growing footprint among young adults, driven by improving recommendations, boosts its competitive prowess. AI usage is making it a popular name among advertisers. This is expected to drive top-line growth.
An expanded portfolio with the launch of a cheaper Quest 3S headset, Orion Augmented Reality glasses, new AI features for Ray-Ban Meta glasses and new multimodal features for Meta AI is a noteworthy development.
The cheaper Quest 3S offers the same mixed reality experience and fast performance as the Meta Quest 3. META also dropped the price of the Quest 3 512 GB version. These developments are expected to improve META’s competitive prowess against Apple’s AR device, Vision Pro.
Expanding integrations with Spotify and Amazon Music, as well as new partnerships with Audible and iHeart, are expected to enhance the experience for Ray-Ban Meta AR glass users.
Despite concerns over the monetization of its AI services in the near term and extending regulatory concerns, META’s growth prospects are huge, driven by the growing adoption of its services. A Growth Score of B reflects this enormous opportunity for investors.
Conclusion
META’s use of AI bodes well for its near-term and long-term prospects. Despite a stretched valuation and growing regulatory concerns, we believe Meta Platforms’ robust service offerings make the stock too attractive to ignore.
Meta Platforms currently has a Zacks Rank #2 (Buy), suggesting that investors should start accumulating the stock now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.