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It’s time to buy Meta shares ahead of an advertising market recovery, KeyBanc said. Analyst Justin Patterson upgraded shares to overweight, saying the social media stock is among a handful of platform and advertising tech companies set to rally on the back of a more stable market. “Our view is that companies with product cycles … and a combination of expense discipline/operational improvement/controversy (META, GOOGL, PINS) stand best positioned to benefit from an eventual recovery,” Patterson wrote to clients on Tuesday. META 1Y mountain Meta shares 1-year Meta shares surged 67% this year after falling 64% in 2022. In the past decade, the social media stock consistently earned double-digit calendar year returns, posting losses just twice during that time period, in 2022 and 2018. However, the analyst’s $240 price target means Meta shares could jump another 18% from Tuesday’s closing price of $202.16. The upgrade comes as Meta lays off tens of thousands of workers in a major restructuring of the company. CEO Mark Zuckerberg called 2023 Meta’s “year of efficiency.” The analyst approved of the moves. “We believe companies making aggressive cost cuts while investing judiciously in future growth opportunities are well positioned for the cycle,” Patterson wrote. “While theoretically a large list, we believe the margin and FCF profiles of META, GOOGL, and PINS are meaningfully better than peers. In an environment with more competitive pressure and higher cost of capital, we believe these traits provide more flexibility to operate through a range of recovery timelines,” Patterson added. —CNBC’s Michael Bloom contributed to this report.
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