Deutsche Bank issued a report that$Meta Platforms (META.US)$Shift business to Reels and invest billions of dollars in capital expenditure, although there is prima facie evidence that the business is performing well, competition is everywhere and cyclical concerns remain. The bank believes that the challenges of Meta are still largely temporary and that investment in privacy measurement and location solutions, the growth of signals on the platform and the increase in Reels monetization should mitigate current disadvantages over time.
The bank said it was shifting to giving priority to efficiency this year and beyond, cutting the midpoint of operating expenditure and capital expenditure guidelines for fiscal 2023 by $5 billion and $4 billion, respectively, which is expected to bring a significant upside to profits and free cash flow. it also makes the bank more confident in the company's profit margins and profitability.
In terms of revenue, the group's Reels seems to be large enough for the company to focus on monetization efficiency, the bank said. The group added another US $40 billion in repurchase authority, which is another good news in terms of capital allocation. The bank left its revenue forecast for the group relatively unchanged, but raised its profit forecasts for fiscal years 2023 and 2024 by 12 per cent and 9 per cent respectively, raising its target price from $125to $200with a rating of "buy".