By Senad Karaahmetovic
New Street Research analysts downgraded Meta Platforms (NASDAQ:META) stock to Neutral from Buy with a $220 per share price target.
The downgrade is mainly a result of a run-up in META stock as it trades ~84% higher year-to-date (YTD). Hence, the analysts see better opportunities elsewhere.
“The Year of Efficiency re-rating is likely complete and while incremental cost cuts could help boost estimates, they are unlikely to impact the multiple materially,” the analysts said in a downgrade note.
Moreover, they worry about the mid-to-long-term outlook for margins given the high costs, mainly about AI and Metaverse investments.
For them to become more positive on META stock, the analysts would like to see a higher level of adoption of Advantage+ and other new ad tech tools as well as easing time spent on competition from TikTok.
Meta shares are down about 0.7% in premarket Monday.