What happened
Shares of Meta Platforms (META +0.28%) were moving higher today on a bullish note from an analyst and in response to a cooler-than-expected inflation report, which lifted stocks broadly.
As of 11:03 a.m. ET on Wednesday, Meta stock was up 3%.
NASDAQ: META
Key Data Points
So what
Deutsche Bank analyst Benjamin Black raised his price target on Meta from $290 to $350 this morning and maintained a buy rating on the stock.
The analyst said that optimism is building for a recovery in the digital advertising market, which could lift Meta's profits following a series of layoffs and other cost-cutting measures earlier this year and late last year. Black also noted that monetization trends are improving with Reels, its TikTok knockoff, and Messenger.
Today's gains also came after the Consumer Price Index (CPI) rose at its slowest rate since March 2021: just 3% year over year. And core inflation, which excludes food and energy, rose just 0.2% on a month-over-month basis.
The data could persuade the Federal Reserve to resist raising interest rates further and makes it more likely that the economy will achieve a soft landing, meaning that inflation will normalize without a recession.
That's good news for Meta and other digital advertising businesses because advertising is cyclical and brands are likely to ramp up spending if they believe the economy isn't going to fall into a recession. As a result, the Nasdaq was up more than 1% this morning.
Now what
The CPI report and the price target hike are the latest pieces of good news for Meta, whose Threads, a Twitter-like platform, has already reached 100 million users just days after it was launched.
The stock has soared this year as investors seem to have put aside concerns about its metaverse project and instead are focusing on its cost-cutting efforts.
Meta has now recovered most of its losses from the tech stock crash, and the stock isn't nearly as cheap as it once was. But if the ad market does show recovery and the company can demonstrate leverage from its recent cost-cutting, shares could continue moving higher from here.
