Meta's Price Target Trimmed at Baird, Flags Near-Term Sentiment Risks

Core Viewpoint - Baird has reduced its price target for Meta Platforms Inc. to $815 from $820 while maintaining an Outperform rating, citing ongoing near-term risks to investor sentiment and a more balanced risk-reward scenario compared to earlier in the year [1] Group 1: Risks and Expectations - Meta continues to face headline risks related to privacy, usage trends, and its strategic shift toward short-form video, but expectations have become more realistic compared to three months ago [2] - Baird encourages investors to take advantage of potential pullbacks and position themselves opportunistically [2] Group 2: Potential Catalysts - Potential catalysts for Meta include clarity from first-quarter guidance and margin commentary, the launch of the next Llama model from Meta's TBD Lab, and enhancements to Meta AI [3] - Additional upside drivers consist of improvements in content ranking, relevance, engagement metrics, monetization acceleration at WhatsApp and Threads, deeper penetration of Advantage+ automation tools, and long-term optionality related to wearables and custom silicon development [3] Group 3: Valuation Analysis - The $815 price target is based on a multi-year discounted cash flow analysis, a 30x multiple on 2026 estimated GAAP earnings, and a 15x multiple on 2026 estimated EV/EBITDA, which are within peer ranges of 10x–30x for 2026 earnings and 5x–30x for EV/EBITDA [4] - Despite elevated risks, Meta's market leadership, margin structure, diversified revenue streams, platform scale, and technology orientation may enable the company to regain a valuation premium over peers in the long run [4]