Sam Boghedda. By
BofA analyst Justin Post on Friday lowered price targets on Alphabet (NASDAQ:), Meta Platforms Inc. (NASDAQ:), and Pinterest (NYSE:) based on expectations of lower GDP growth.
In a note focused on online media stocks, analysts downgraded stock projections, BofA economists downgraded their outlook for US GDP growth and the Fed recently up 75 bps, with more hikes on the economy. Lost weight.
“While historical data shows there is a high correlation between US online advertising industry growth and US GDP, we expect lower online media spend in 2H’22 and 2023,” Post said. “Overall, we are lowering our 2023 projections for Alphabet, Meta and Pinterest (as well as cutting our most recent estimate on Snap (NYSE:)) by 8% or $34bn. For now, we have put the potential in our outlook. Recession is not included, and 11% y/y revenue growth is expected for the group in 2023.
The analyst lowered Alphabet’s price target from $2,940 to $2,636 based on lower core services earnings estimates and 19x 2023 core services GAAP EPS (versus 20x prior), plus cash. “Our revised multiple reflects 2023 expected growth and multiple compression across the broader market and sector,” the post wrote, which reiterated a buy rating on the stock.
Meta’s price target was reduced from $262 (based on 18x 2023E GAAP EPS plus cash) to $233 based on lower 2023E GAAP EPS ($12.05 versus 13.68 prior) and an unchanged 18x multiple, plus $16 cash. The post also reiterated the buy rating on the stock.
Meanwhile, for Pinterest, the firm reiterated a neutral rating on the stock and lowered the price target from $38 to $31, based on 2023 revenue projections and an unchanged 7x 2023 EV/revenue multiplier. “We see Pinterest as a high-quality platform for advertisers and think users can bottom out in 2Q.”
Google and Meta remain the firm’s top bearish stocks.