Meta Platforms shares rose on Monday after JPMorgan added the stock to its Analyst Focus List. The analyst pointed to AI-powered ad growth and the Muse AI agent, while the company still faces ongoing litigation.
Meta Platforms shares gained as much as 5.6% on Monday. As of 12:47 p.m. ET, the stock was still up 5.1%.
The broader market rebound likely contributed to the move, but bullish commentary from a Wall Street analyst helped push the stock higher.
JPMorgan adds Meta to its focus list
JPMorgan analyst Doug Anmuth added Meta to the bank's Analyst Focus List and called it a preferred internet stock. He cited growth in the company's AI-powered ad sales and the potential of its Muse AI models.
Anmuth maintained an overweight (buy) rating and a $940 price target. According to the source, the price target implies potential upside of 54% from Friday's closing price.
Third-quarter results back the call
In the third quarter, Meta's revenue grew 26% year over year to $64.6 billion. Diluted earnings per share rose 265% to $3.83.
Excluding a one-time charge to settle litigation, Meta's EPS of $7.40 would have risen sevenfold.
Muse downloads and litigation risk
The Muse app was downloaded more than 5 million times within three weeks of its release, outpacing ChatGPT, which took 56 days to reach that mark. Muse has since surpassed 10.9 million downloads, according to Sensor Tower.
Beyond a limited free tier, Meta charges $20 per month for its Power tier and $100 per month for its Maximum tier. Estimates vary, but Muse could generate incremental revenue of $27 billion by 2030, according to Citigroup.
The company still faces ongoing litigation as several cases wind their way through the courts. The source's author argues that much of that risk is already reflected in the stock price, which trades at less than 22 times earnings.
Source: The Motley Fool
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