BMO Capital analyst Brian Pitz initiated coverage on Meta Platforms Inc (NASDAQ:META) with a Market Perform rating and a price target of $397.

The re-rating reflected concerns about unforeseen growth headwinds into the second half of 2024.

The analyst advised investors to maintain positions soon, realizing the likely near-term upside from numerous favorable fourth-quarter 2024 tailwinds. However, he did not recommend allocating new funds to META.

Global digital advertising is increasingly competitive, with numerous well-capitalized companies and billions of engaged users.

Pitz noted that they are deep into The Age of the Content Creator; if scaled social media platforms do not evolve their revenue share models, they could risk material long-term losses.

TikTok remains a competitive threat to Instagram, although, in recent months, reel engagement has converged with TikTok, given some 2023 share loss.

The analyst projected 2023 revenue and EPS of $134.9 billion (vs. consensus of $133.6 billion) and $14.42 (vs. consensus $14.35).

Pitz initiated coverage on Pinterest Inc (NYSE:PINS) with an Outperform rating and a price target of $45.

The re-rating reflected monetization upside as Pinterest integrated Amazon.Com Inc (NASDAQ:AMZN) Ads and incremental 3P demand over time in the U.S. and internationally.

The analyst also flagged rising user engagement and utility, focusing on lower-funnel ad conversions.

Gross and EBITDA margin expansion is on the horizon with mid-teens overall revenue growth guidance.

AI has become an increasingly important driver of engagement, relevance, conversions, and internal efficiencies.

Pinterest has built a proprietary AI model based on its deep 1P dataset from user activity, contributing to several business areas.

The Creative Studio functionality allows advertisers to instantaneously create multiple ad copies to serve the most relevant audiences.

The analyst projected 2023 revenue and EPS of $3.05 billion (vs. consensus of $3.06 billion) and $(0.08) (vs. consensus of $1.07).

Pitz initiated coverage on Snap Inc (NYSE:SNAP) with an Outperform rating and a price target of $22.

The analyst noted that Snap remains a compelling long-term growth platform, given the differentiated privacy of its messaging platform and augmented reality (AR) leadership.

With 250 million+ daily average users (DAU) engaging with AR, there are increasing signs that Snap's platform investments have inflected positive ad revenue contributions.

Following A/B testing with large advertisers in 2023, Snap has regained lost signal, which should result in incremental adoption of ad products in 2024+.

The analyst applauded the shift in focus to Creators from Publishers over the last 12+ months.

The analyst projected 2023 revenue and EPS of $4.6 billion (vs. consensus of $4.61 billion) and $0.05 (vs. consensus of $0.06).

Price Actions: META shares traded lower by 0.12% at $358.23 on the last check Tuesday. PINS shares traded higher by 1.35% at $37.88, and SNAP shares traded lower by 0.87% at $17.16.