© Reuters Alphabet Meta Platforms price targets are reduced at Morgan Stanley due to lower online ad growth in 2023
By Sam Boughedda
Morgan Stanley analysts cut the company’s price targets on Meta Platforms Inc (NASDAQ:) and Parent company of Google Alphabet (NASDAQ:) in a note to clients on Tuesday.
They lowered the price target on Meta to $100 from $105 per share and on Alphabet to $120 from $125 per share.
The cuts are the result of the company’s view that there will be weaker e-commerce and online advertising macro growth in 2023 after weaker third-quarter results and still high uncertainty.
“Signs of a weaker ad macro market continued to grow on Q3 earnings (14 of 19 companies are missing Q3 ad revenue expectations and/or heading for slower than expected future growth). expected,” the analysts wrote. “Additionally, the importance of e-commerce in driving the online advertising industry (42% of online advertising comes from e-commerce + CPGs) combined with our new weaker growth AMZN retail revenue (following a weaker-than-expected forecast) indicates additional risk.”
They added that the earnings come as inflation is still high, with pressures on business costs to rise, while Morgan Stanley’s US macro team expects real GDP growth of 0, 5% in 2023. e-commerce macroeconomic estimates of around 5%/4%…now modeling growth of around 6%/5% in online advertising and e-commerce.”
However, analysts have acknowledged that the good news is that large-cap tech appears to be making adjustments to the slowing environment, and they continue to favor Amazon (NASDAQ:) and Alphabet within the mega-cap complex.