What happened
A reassuring analyst note helped support Meta Platforms' (META 1.85%) share-price gain on Wednesday. After the note was published, the social media bellwether was trading nearly 3% higher by midafternoon. That was more than double the increase of the S&P 500 index at that point.
So what
The prognosticator behind the note was Justin Post at Bank of America. In reiterating his buy recommendation on Meta Platforms at a price target of $375, he said that the company's shares had "slightly underperformed" both the stock market and peer stocks.
In Post's view, this was due to a set of factors, including potentially higher-than-expected costs, possible regulatory issues, and losses in the company's underperforming metaverse efforts. He also cited the declining take-up of Threads, Meta Platforms' answer to Twitter, as a current worry.
The resulting investor wariness has led to the stock's underperformance. The Bank of America analyst thinks it is underpriced at the moment at 16 times estimated 2024 profitability.
Post added, "We believe the stock could see renewed enthusiasm on 2024 upside potential once Street has greater certainty on 2024 spending targets (usually provided with 3Q earnings)."
Now what
While investors are right to fret about factors like costs and the losses from the sputtering metaverse push, Meta Platforms remains a powerhouse in the social media world.
Its core asset, Facebook, is still a must for individuals and companies even marginally involved in social media, and photo- and video-sharing site Instagram continues to be a highly influential medium. To me, it very much seems like there is currently far more upside than potential risk with this stock.
