Meta Platforms Results its 'Worst Set' So Far - Societe Generale

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By Sam Boughedda

Societe Generale analysts lowered the firm's price target on Meta Platforms (META) to $80 from $185, maintaining a Sell rating in a note to investors on Friday.

The analysts stated that Meta's third-quarter results included a -28% earnings miss, a weak outlook, and a call for a paradigm shift in its appraisal.

"This was in our view the company's worst set of results, with downgraded guidance and a 28% EPS miss, but they also prompt a step-change in appraisal. Revenue growth falling into decline (-4%) included average price per ad -18% yoy and led to the 28% EPS miss. The company's attempt to offset this with increasing ad load will only cause more problems with user defection. A weak 4Q revenue outlook and further FY23e caution coupled with further increases in opex and capex fuel concerns further," wrote the analysts. "We downgrade our FY22e adj. EPS by c.22%, FY23e by c.12%, and FY24e by c.16%."

They added that the update also affects company-specific risk, terminal margin, and terminal growth in Societe Generale's DCF-based target price. In addition, Societe Generale, who have had a Sell rating on the company for a considerable period, outlined four catalysts needed for them to turn more positive on the stock, including deteriorating user growth stabilizing, competition easing, downward pressure on operating margin stopping, and Capex/sales needing "to stop trending up."