Credit Suisse continues to see strong upside in Meta, Alphabet despite double-digit price target cuts

  • Swiss credit analyst Stephen Ju repriced two prominent FAANG stocks, lowering their price targets.
  • Ju maintained Meta Platforms Inc META with an outperform rating and lowers the price target from $273 to $245.
  • The reassessment considered the potential for above-expected ad revenue growth on product innovation, conservative street models underestimating the potential for long-term monetization and the option of faster FCF growth .
  • Its audits point to a second quarter in line, with growth expectations for the second half of 2022 falling in the macro backdrop, with stagnant quarter-on-quarter fiscal growth from the second to third quarters.
  • Ju took a more conservative second half of 2022 and forecast advertising revenue growth of 1% on a reported basis for the third quarter and -3% for the fourth quarter. The analyst also cut his ad revenue growth estimate for 2023 to 11% FXN.
  • Ju maintained Alphabet Inc. GOOG GOOGL with an outperformance and reduced the price target from $170 to $143.
  • The reassessment considered continued improvements in search monetization through the product, AI-powered updates, larger-than-expected revenue contribution from non-search related businesses, optionality, creating shareholder value from new tab monetization initiatives and marketing other bets. .
  • In what the analyst says will be the first of many adjustments to his estimates, given deteriorating visibility, Ju slashed his forecast for Google’s advertising business as he received feedback from marketers. on declining budgets due to macro uncertainty.
  • While the extent of the ad revenue squeeze for Q3 and beyond remains unknown, marketers are clearly showing signs of defensive behavior amid a slowdown as they shift budgets to Google in search a higher return on investment, says the analyst.
  • Price Action: META shares traded up 4.65% at $175.09 when last checked on Tuesday. Shares of GOOG traded up 3.02% at $113.23.
  • Photo via Unsplash

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