Morgan Stanley analysts told investors in a note Thursday that they see a path to $20 of 2024 EPS for Meta Platforms (NASDAQ:META).
The analysts, who have an Overweight rating and a $375 price target on the stock, stated that their bottom-up ad analysis gives them higher confidence in their base case of 13% 2024 revenue growth and $18.50 in EPS "while also laying the path to $20 of EPS."
"The fact that Reels engagement is driving incremental time spent on the platform (we believe at a rising rate in 2Q:23) gives more confidence in Reels' ability to drive META's ad revenue," the analysts wrote.
"Faster 'core' ad revenue growth and higher Reels monetization paint a path toward 20% '24 ad revenue growth and ~$20 of '24 EPS," they added. "Faster 'core' META growth and/or higher monetization of Reels can lead to further upside. Every 100bp of growth in META's 'core' would add ~1% to EPS."
The analysts concluded that continued top and bottom-line upward revisions should drive upside and multiple expansion from the current ~16X '24 EPS trading level.