Citi thinks the online advertising market is set for a strong rebound, and that’s already evident within Meta Platforms . The bank raised its price target on Meta to $360 per share, the highest on Wall Street, from $315. The new target represents upside of more than 29% from Monday’s close. Citi also reiterated the stock as its top pick in its basket of North American internet coverage. Meta has soared more than 131% this year, as the company has ridden the wave of investor excitement over artificial intelligence. On top of that, Meta has moved to reduce costs, with CEO Mark Zuckerberg calling 2023 the “year of efficiency.” META YTD mountain META in 2023 But analyst Ronald Josey said Meta’s Reels product is driving Citi’s bullish sentiment. He noted that ad loads on Reels reached 17% quarter to date — and 18% in June alone. “We now project Meta’s ad revs to grow 14% [year-over-year] in ’24 with Reels generating ~$10.5B of revenue in ’24, though continued adoption of Click-to-Message, newer Advantage+ verticals, the potential around AI Agents, and a more stable/improving digital ad environment could support greater, higher margin ad growth going forward,” Josey said. The strong advertising output on Reels, Josey said, coupled with the firm’s takeaways from attending the Cannes-Lions Festival of Creativity underpins Citi’s overall view that the online ad market is on course to improve steadily. “While stability has been a broader theme this year, given at/near record advertiser attendance at Cannes (in our view), we believe there is an increased willingness among marketers to partner and deploy ad budgets on those platforms at scale that are investing in ads innovation,” he said. — CNBC’s Michael Bloom contributed to this report.
