TLDR
- Jefferies reaffirmed its Buy rating on Meta with a $910 price target, representing 48% upside from recent closing prices
- Meta beat Q3 earnings with $7.25 EPS versus $6.74 expected and revenue jumped 26% to $51.24 billion
- The company plans to roll out ads on Threads globally next week, monetizing its 400 million+ active user base
- Recent insider selling, analyst downgrades, and regulatory issues including FTC appeals and UK ad problems create near-term headwinds
- Reality Labs layoffs and Manus acquisition fallout raise execution concerns while Meta trades at an 8-point discount to Google
Meta Platforms received a vote of confidence from Jefferies Financial Group this week. The firm reiterated its Buy rating with a $910 price target.
That target implies 48% upside from Meta’s recent close of $612.96. The stock has pulled back from its 52-week high of $796.25.
The endorsement comes as Meta faces mixed signals from Wall Street. The consensus rating sits at “Moderate Buy” with an average price target of $821.55. Four analysts rate the stock Strong Buy, 37 say Buy, and seven recommend Hold.
Several firms have recently downgraded Meta. Zacks Research cut its rating from “strong-buy” to “hold” in November. Wall Street Zen and Benchmark made similar moves.
KeyCorp lowered its price target from $905 to $875. UBS trimmed its target from $915 to $830 while keeping a Buy rating.
Why Jefferies Sees Opportunity
Analyst Brent Thill pointed to five reasons for buying the dip. Meta now trades at an 8-point forward P/E discount to Google.
That gap stems from concerns about margins, capital expenditure, and AI execution. Jefferies believes the market has overreacted.
The firm sees limited downside to current estimates. Positive revisions could come through 2026.
Meta’s recent earnings beat expectations. The company reported $7.25 EPS versus the $6.74 consensus. Revenue rose 26.2% year-over-year to $51.24 billion.
Management maintains a return on equity of 39.35%. Net margins hit 30.89% in the third quarter.
The company will begin showing ads on Threads globally next week. The platform now has more than 400 million active users.
This represents a direct monetization opportunity. Jefferies estimates WhatsApp generates a $9 billion revenue run rate today. That could scale to $36 billion by fiscal 2029.
Threads’ 500 million users offer early monetization potential. Meta’s AI lab delivered its first in-house models according to the CTO.
New “All-Star AI hires” should deliver a stronger frontier model in early 2026. This comes after earlier challenges with Llama 4.
Meta can continue strengthening its “Core Flywheel powered by AI” through recommendation and conversion systems. The Oklo nuclear partnership could power data centers and reduce infrastructure costs.
Headwinds Remain
Director Robert M. Kimmitt sold 580 shares at $618.28 on January 15th. Insider Jennifer Newstead sold 519 shares at $658.69 in late December.
Total insider sales reached $24.7 million over three months. Insiders own 13.61% of the company.
Hedge fund Cypress Funds trimmed its stake recently. This adds to selling pressure.
Regulatory issues persist. The FTC will appeal an earlier antitrust ruling. UK authorities flagged illegal gambling ads on Meta’s platforms.
Reality Labs underwent layoffs recently. Some customers walked away after the Manus acquisition.
These moves underscore execution risks tied to metaverse investments. The Street is focused on upcoming earnings and 2026 capital expenditure guidance.
Meta’s capex plan matters for partners like Taiwan Semiconductor and Broadcom. Investors want clarity on long-term unit economics.
The stock trades at a P/E ratio of 27.07 with a market cap of $1.54 trillion. It has a debt-to-equity ratio of 0.15 and a current ratio of 1.98.
Institutional investors own 79.91% of the company. Truist reiterated a Buy rating and said AI fears are largely priced in.
Jefferies does not expect guidance above Street estimates to surprise investors. Management often guides conservatively and Q4 likely represents peak pressure.
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