Meta Platforms (META) posted a “strong” Q4 EPS and revenue beat and Q1 guidance was a “positive surprise,” BofA Securities said Friday in a report.
The investment firm raised Meta’s price target to $510 from $425 and reiterated the buy rating.
The company reported Q4 earnings late Thursday of $5.33 per diluted share, up from $1.76 a year earlier. Analysts polled by Capital IQ expected $4.94. Revenue rose to $40.1 billion from $32.2 billion. Analysts expected $39.2 billion.
The revenue beat was mainly driven by the company’s Reels video product, as well as its Messaging, artificial intelligence products and tools, and the launch of the Quest 3 virtual reality headset, BofA said.
Meta said it expects Q1 revenue of $34.5 billion to $37 billion. Analysts polled by Capital IQ as of late Thursday expected $33.9 billion.
The Q1 guidance was a “big surprise,” well above Wall Street estimates, BofA said. The outlook suggests “acceleration on tougher comps and that the Reels, Messaging & AI driven revenue cycle is stronger than expected,” the report said.
The earnings call had an “important focus on laying out Meta’s AI goals and strategy” with Chief Executive Officer Mark Zuckerberg outlining plans to build advanced AI products and services, custom AI chips and a new category of devices that would allow frictionless interactions with AI agents, BofA said.
“We believe Reels, Messaging and AI driven ad improvements are still early, and could drive further upside in 2024,” BofA said. “Moreover, with a large capex budget, internal AI supercomputer, inhouse LLM & custom AI chips, we think Meta’s AI assets are underappreciated in the stock price.”
Shares of Meta jumped 21% in recent Friday trading.