Needham analyst Laura Martin has maintained their neutral stance on META stock, giving a Hold rating on July 22.
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Laura Martin’s rating is based on a combination of factors that suggest caution regarding Meta Platforms’ stock. One primary concern is the potential for the stock to be over-owned, which could lead to a significant drop in share prices if the current positive sentiment surrounding the company diminishes. Additionally, there is apprehension that Meta may project increased capital expenditures, reduced margins, and lower free cash flow for the fiscal years 2025 and 2026, which could negatively impact investor confidence.
Another critical factor influencing the Hold rating is the company’s financial metrics, particularly the free cash flow minus stock-based compensation. Despite some growth in free cash flow over the past four years, the substantial increase in stock-based compensation per full-time employee has significantly reduced the free cash flow per employee. This trend raises concerns about the company’s ability to maintain its financial health and deliver shareholder value, warranting a more cautious approach to its stock.
In another report released on July 22, Scotiabank also maintained a Hold rating on the stock with a $675.00 price target.