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Meta stock – what to expect ahead of earnings

After seeing its gains of recent years almost wiped out in the past few months, can Meta’s upcoming earnings restore some investor enthusiasm?

Facebook Source: Bloomberg

When does Meta report earnings?

Meta reports earnings for its fiscal first quarter on 27 April.

Meta earnings – what does the Street expect?

Meta is expected to report revenue of $28.2 billion for the quarter, up from $25.4 billion last year, while earnings per share (EPS) are forecast to be $2.55, down from $3.30 a year ago.

It is interesting to see Meta being so cautious on its overall outlook. The events of recent months will likely have boosted the public’s engagement with social media, at first Omicron and then the Ukraine war swept across global news. Meta has been a solid performer against estimates in recent years, with only rare misses, providing a solid record of performance.

Meta remains highly cash-generative, and has low levels of debt. The price-to earnings (PE) ratio has gone from almost 30 during most of 2021 to 15 in recent weeks, its lowest level in a number of years. Given this, it is perhaps hard to argue that Meta is particularly over-valued.

Meta – broker ratings and price targets

Meta stock currently has 45 ‘buys’, with sixteen ‘hold’ recommendations, as per data from Reuters. Only 2 ‘sell’ ratings are currently recorded. The current median target price is $325, representing an upside of 71%.

Meta stock price – technical analysis

Meta has been one of the worst performing tech names this year, and its recent fall means it is up just 25% over the last five years, a worse performance even than Netflix . Despite bouncing over the past month, the stock has given back all its gains from early March.

The $186 area continues to hold as support, but if this is broken to the downside then $179, $168 and then $161 become potential targets to the downside. Following on from this would be the March 2020 low at $137.60.

Meta Stock Source: ProRealTime
Meta Stock Source: ProRealTime

Meta needs to defy the pessimists

Meta is in desperate need of a strong earnings report to steady the stock, after its huge losses. Sentiment remains very negative, and with bond yields still rising even Meta’s cheaper valuation needs a spark to inspire investors to move back into the stock. Indeed, even if this earnings report does exceed forecasts, it will probably take at least another quarter to really tempt investors back.

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