Scotiabank Raises PT to $675 from $525, Maintains Sector Perform Rating

Scotiabank Raises PT to $675 from $525, Maintains Sector Perform Rating

Scotiabank has raised its price target for Meta Platforms Inc. (NASDAQ: META) to $675, maintaining a Sector Perform rating on the stock. The new target reflects the bank's optimism about the company's financial health and growth prospects. Meta Platforms currently trades at $712.97, near its 52-week high of $747.90, with a P/E ratio of 27.08 [1].

Scotiabank expects tariff impacts to persist during the second quarter but believes these will be offset by increased budgets from non-US advertisers due to USD depreciation. The firm anticipates WhatsApp monetization to begin in the second half of the year, potentially contributing approximately 2-3% of run-rate revenue by the end of 2026 [1]. According to InvestingPro, Meta demonstrates impressive financial health with a 'GREAT' overall score, supported by strong cash flows and solid balance sheet metrics [1].

The bank notes that algorithms have continued to benefit from deepening neural networks, which should drive improving ad ROI over the next year. For the second quarter, Scotiabank expects revenue growth of approximately 13%, slightly lower than the consensus estimate of 14.6%, but near the top end of Meta’s guidance. Meta has already demonstrated strong growth momentum, with revenue increasing 19.37% over the last twelve months to $170.36 billion [1].

On margins, Scotiabank forecasts that depreciation will impact gross margin throughout 2026, especially given plans for a 5GW Hyperion datacenter, and cost pressures will increase. The firm expects stable gross margins this year followed by a decline next year [1]. Scotiabank also points out that given new hires within AI, existing models will likely be retrained and run parallel with GenAI team efforts, which will increase capital expenditures for Meta Platforms [1].

In other recent news, Meta Platforms has seen a notable increase in its stock price target, with Morgan Stanley raising it to $750 from a previous $650, maintaining an Overweight rating. The investment firm attributes this adjustment to Meta’s advancements in GPU-enabled machine learning, which are expected to boost engagement and monetization. Additionally, Citizens JMP has reaffirmed its Market Outperform rating for Meta, also setting a price target of $750, citing the benefits of AI in enhancing Meta’s advertising business [1].

Meta has appointed Connor Hayes as the head of Threads, a social media platform under its umbrella, indicating a strategic focus on leadership for the growing service. Meanwhile, Meta has opted not to sign the European Commission’s Code of Practice for AI models, with Chief Global Affairs Officer Joel Kaplan expressing concerns over the framework’s legal uncertainties. This decision highlights Meta’s stance on regulatory matters in the AI domain. Furthermore, Meta, along with other tech giants, has been questioned by U.S. lawmakers about the security of submarine communications cables potentially serviced by Chinese and Russian entities. These developments reflect Meta’s ongoing efforts to navigate regulatory landscapes and enhance its technological capabilities [1].

References:
[1] https://www.investing.com/news/analyst-ratings/meta-platforms-stock-price-target-raised-to-675-by-scotiabank-93CH-4145697
[2] https://www.ainvest.com/news/scotiabank-maintains-sector-perform-rating-raises-price-target-kinder-morgan-kmi-28-00-2507/
[3] https://www.gurufocus.com/news/2994121/scotiabank-adjusts-price-target-for-meta-platforms-meta-to-675-meta-stock-news