By Sam Boughedda
JPMorgan analysts reiterated Meta Platforms (NASDAQ:META) as a top pick, stating there are signs of stabilization in the online ad market, with an improvement through the first quarter, but visibility remains limited.
They explained that the online ad market has been choppy for several quarters, and it remained weak through January, but the firm's checks have indicated signs of stabilization & modest improvement into February & March.
"We also believe select marketers are shifting some spend away from TikTok given ongoing regulatory, data security, & measurement concerns. Overall, we believe trends are somewhat better than when GOOGL/META/PINS/SNAP reported 4Q in late Jan/early Feb, suggesting potential for upside. However, macro concerns remain, and we believe overall visibility is limited, though comps do ease more into 2Q," the analysts wrote.
Meta, which has an Overweight rating and a $270 price target at JPMorgan, remains the firm's "favorite online ad name and a top pick overall."
"We recognize the next leg for the stock needs to come from revenue acceleration, and we are encouraged by AI/ad tech improvements, Reels, & Click-to-Message ads, w/some help from near-term easing of comps," the analysts added.