Bank of America is getting more bullish on shares of Meta Platforms , viewing the social media giant’s newfound focus on efficiency as a potentially big catalyst going forward. Analyst Justin Post upgraded the stock to buy from neutral and lifted his price target to $220 from $160, saying that Meta’s focus on improving efficiency sets shares up for a potential multiple expansion. The new target implies upside of 43.7%. “With the new efficiency mentality, the stock is now positioned for leverage/EPS upside as the ad environment improves,” he wrote in a note to clients Thursday. META YTD mountain Meta Platforms shares have soared 27% this year. Post’s upgrade also hinges on an improving environment for Reels growth as TikTok usage eases. Meta’s investment in artificial intelligence and machine learning, which contributed to 20% more conversion for advertisers during the quarter, is another bright spot. These improving efficiencies, he said, situate the company as a “potential multi-year AI/ML play” able to support increased Reels monetization and ad performance over the long term. Shares of Meta languished in 2022, tumbling more than 64% as technology stocks took a hit in a slowing growth environment and the company funneled money into its metaverse play. Its Reality Labs arm, in fact, lost $13.7 billion last year . But this year, investor sentiment has improved, with shares up more than 27% as of Wednesday’s close. The stock rose an additional 19% premarket after the company posted a fourth-quarter revenue beat and announced a $40 billion stock buyback after Wednesday’s close. “Meta is an investment in increasing social and mobile Internet usage, and also offers exposure to the increasing use of AI/ML technology and potential long-term Metaverse opportunity,” Post said. “With the new efficiency mentality, we believe Meta is positioned strong EPS growth when advertising environment improves.” — CNBC’s Michael Bloom contributed reporting.
