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  • Mizuho analyst James Lee maintained Meta Platforms Inc META with a Buy and cut the price target from $325 to $250.
  • His checks with leading agencies showed that the 2Q22 seasonal lift was about 33% of the average level due to macro, Apple Inc AAPL iOS privacy, and mix shift to Instagram Reels. 
  • Several factors affected the quarter due to economic and industry issues. He believed that challenges remained in iOS privacy as agencies still optimized META’s workaround solutions.
  • Also Read: Needham Considers It Futile For Meta To Compete With TikTok, YouTube, Amazon, Google
  • In addition, he saw the continued mix shift to offline and service industries as less favorable for META advertising.
  • Finally, the progress in Insta Reels could also negatively impact monetization near-term, he noted.
  • As a result, he expects Meta’s revenue growth to be -2% YoY in 2Q22 (vs. flat growth consensus), and Street expectations for 2H22 and FY23 appear aggressive at 7% and 14% YoY growth, respectively. 
  • Therefore, he cut his FY24E EBITDA by 18% to $65 billion and price target from $325 to $250. 
  • To offset the expected top-line shortfall, he believes that management could reduce OPEX growth guidance from 25% YoY to 18%, which he feels could mitigate the stock’s downside risk. 
  • Price Action: META shares traded lower by 2.14% at $165.65 on the last check Monday.

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