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Meta Platforms Likely to Beat in Q3 Earnings: ETFs to Buy
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Social media giant Meta Platforms (META - Free Report) is set to release third-quarter fiscal 2024 results today, after market close.
META stock has delivered returns of 28.1% over the past three months and has outperformed the industry’s growth of 5.2%. The solid trend is likely to continue given that Meta Platforms has a high chance of beating earnings estimates and has also seen positive earnings estimate revision for the to-be-reported quarter, which is generally a precursor to an earnings beat. This is not enough, as analysts also turned bullish ahead of the earnings (read: How to Play Mag 7 Earnings).
Image Source: Zacks Investment Research
This has put the focus on ETFs — iShares Global Comm Services ETF (IXP - Free Report) , Fidelity MSCI Communication Services Index ETF (FCOM - Free Report) , Vanguard Communication Services ETF (VOX - Free Report) , Communication Services Select Sector SPDR Fund (XLC - Free Report) and First Trust Dow Jones Internet Index Fund (FDN - Free Report) — that have a substantial allocation to this social media giant.
Earnings Whispers
Meta Platforms has an Earnings ESP of +2.83% and a Zacks Rank #2 (Buy). According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Meta Platforms saw a positive earnings estimate revision of a couple of cents over the past 30 days for the soon-to-be-reported quarter. Analysts increasing estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. The current Zacks Consensus Estimate for the to-be-reported quarter indicates year-over-year earnings growth of 17.8%. Revenues are expected to increase 17.6%. Meta Platforms delivered an earnings surprise of 12.6%, on average, in the last four quarters.
Meta Platforms, Inc. Price, Consensus and EPS Surprise
The social media giant beat the Zacks Consensus Estimate for earnings in the last seven consecutive quarters and the same for revenues in nine straight quarters. It currently has a Wall Street analyst recommendation of 1.39 on a scale of 1 to 5 (Strong Buy to Strong Sell), made by 49 brokerage firms. This is up from 1.32 a month ago based on 47 recommendations. Of the 49 recommendations, 41 are Strong Buy and one is Buy (read: Big 5 Earnings Ahead: Are Single-Stock ETFs Set for Big Gains?). Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
Based on short-term price targets offered by 46 analysts, the average price target for Meta Platforms comes to $620.91. The forecasts range from a low of $425.00 to a high of $811.00.
META has a solid Growth and Momentum Score of B each and belongs to a top-ranked Zacks Industry (top 23%). At current levels, Meta's stock trades at 26.97X forward earnings, a discount to the Zacks Internet-Software industry average of 32.31X.
Analysts Turn Bullish
Heading into the earnings announcement, Wall Street became bullish on the company’s growth prospects, with many analysts raising the target price on META. UBS raised the price target to $690 from $635, maintaining a Buy rating, while Guggenheim raised the price target to $665 from $600 with a Buy rating. Jefferies and TD Cowen lifted the price target on Meta Platforms to $675 from $600 each and kept a Buy rating. KeyBanc increased the price target to $655 from the previous $560 while maintaining an Overweight rating on the stock.
Analysts cited enhanced user engagement and better monetization of video content, including the Reels feature on the platform. An increased ad load and overall usage rate for its Reels (short-form video) offering would "continue to drive growth" for Instagram.
Bank of America viewed Meta as a "top AI pick," pointing to tailwinds, like strong growth in Meta's AI-powered ads business, continued growth among younger users and more AI growth opportunities in general.
Let’s Recall
In the last reported quarter, WhatsApp reached more than 100 million monthly users in the United States and Threads. Meta AI is on track to be the most used AI assistant in the world by the end of the year,” said CEO Mark Zuckerberg. Meta will continue to spend big on AI infrastructure, anticipating 2024 capital expenditure in the range of $37-$40 billion, up by $2 billion at the lower end from its previous forecast of $35-$40 billion. It continues to expect total expenses in the range of $96-99 billion for 2024.
The world’s largest social media platform expects to post revenues in the range of $38.5-$41 billion for the third quarter.
ETFs in Focus
iShares Global Comm Services ETF (IXP - Free Report) - Meta Platforms is the top firm, accounting for 23.6% share.
Fidelity MSCI Communication Services Index ETF (FCOM - Free Report) - Meta Platforms occupies the top position at 23.2%.
Vanguard Communication Services ETF (VOX - Free Report) - Meta Platform takes the top spot with a 23.1% share.
Image: Bigstock
Meta Platforms Likely to Beat in Q3 Earnings: ETFs to Buy
Social media giant Meta Platforms (META - Free Report) is set to release third-quarter fiscal 2024 results today, after market close.
META stock has delivered returns of 28.1% over the past three months and has outperformed the industry’s growth of 5.2%. The solid trend is likely to continue given that Meta Platforms has a high chance of beating earnings estimates and has also seen positive earnings estimate revision for the to-be-reported quarter, which is generally a precursor to an earnings beat. This is not enough, as analysts also turned bullish ahead of the earnings (read: How to Play Mag 7 Earnings).
Image Source: Zacks Investment Research
This has put the focus on ETFs — iShares Global Comm Services ETF (IXP - Free Report) , Fidelity MSCI Communication Services Index ETF (FCOM - Free Report) , Vanguard Communication Services ETF (VOX - Free Report) , Communication Services Select Sector SPDR Fund (XLC - Free Report) and First Trust Dow Jones Internet Index Fund (FDN - Free Report) — that have a substantial allocation to this social media giant.
Earnings Whispers
Meta Platforms has an Earnings ESP of +2.83% and a Zacks Rank #2 (Buy). According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Meta Platforms saw a positive earnings estimate revision of a couple of cents over the past 30 days for the soon-to-be-reported quarter. Analysts increasing estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. The current Zacks Consensus Estimate for the to-be-reported quarter indicates year-over-year earnings growth of 17.8%. Revenues are expected to increase 17.6%. Meta Platforms delivered an earnings surprise of 12.6%, on average, in the last four quarters.
Meta Platforms, Inc. Price, Consensus and EPS Surprise
Meta Platforms, Inc. price-consensus-eps-surprise-chart | Meta Platforms, Inc. Quote
The social media giant beat the Zacks Consensus Estimate for earnings in the last seven consecutive quarters and the same for revenues in nine straight quarters. It currently has a Wall Street analyst recommendation of 1.39 on a scale of 1 to 5 (Strong Buy to Strong Sell), made by 49 brokerage firms. This is up from 1.32 a month ago based on 47 recommendations. Of the 49 recommendations, 41 are Strong Buy and one is Buy (read: Big 5 Earnings Ahead: Are Single-Stock ETFs Set for Big Gains?).
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
Based on short-term price targets offered by 46 analysts, the average price target for Meta Platforms comes to $620.91. The forecasts range from a low of $425.00 to a high of $811.00.
META has a solid Growth and Momentum Score of B each and belongs to a top-ranked Zacks Industry (top 23%). At current levels, Meta's stock trades at 26.97X forward earnings, a discount to the Zacks Internet-Software industry average of 32.31X.
Analysts Turn Bullish
Heading into the earnings announcement, Wall Street became bullish on the company’s growth prospects, with many analysts raising the target price on META. UBS raised the price target to $690 from $635, maintaining a Buy rating, while Guggenheim raised the price target to $665 from $600 with a Buy rating. Jefferies and TD Cowen lifted the price target on Meta Platforms to $675 from $600 each and kept a Buy rating. KeyBanc increased the price target to $655 from the previous $560 while maintaining an Overweight rating on the stock.
Analysts cited enhanced user engagement and better monetization of video content, including the Reels feature on the platform. An increased ad load and overall usage rate for its Reels (short-form video) offering would "continue to drive growth" for Instagram.
Bank of America viewed Meta as a "top AI pick," pointing to tailwinds, like strong growth in Meta's AI-powered ads business, continued growth among younger users and more AI growth opportunities in general.
Let’s Recall
In the last reported quarter, WhatsApp reached more than 100 million monthly users in the United States and Threads. Meta AI is on track to be the most used AI assistant in the world by the end of the year,” said CEO Mark Zuckerberg. Meta will continue to spend big on AI infrastructure, anticipating 2024 capital expenditure in the range of $37-$40 billion, up by $2 billion at the lower end from its previous forecast of $35-$40 billion. It continues to expect total expenses in the range of $96-99 billion for 2024.
The world’s largest social media platform expects to post revenues in the range of $38.5-$41 billion for the third quarter.
ETFs in Focus
iShares Global Comm Services ETF (IXP - Free Report) - Meta Platforms is the top firm, accounting for 23.6% share.
Fidelity MSCI Communication Services Index ETF (FCOM - Free Report) - Meta Platforms occupies the top position at 23.2%.
Vanguard Communication Services ETF (VOX - Free Report) - Meta Platform takes the top spot with a 23.1% share.
Communication Services Select Sector SPDR Fund (XLC - Free Report) - Meta Platforms takes the top position at 20.3% share (see: all the Communication ETFs here).
First Trust Dow Jones Internet Index Fund (FDN - Free Report) - Meta Platforms occupies the top position with 10.2% of the assets.