Top Pick: Meta Stock. Why Analyst Likes Facebook-Amazon Deal.

An analyst suggested Monday that Amazon (AMZN) might help Facebook parent company Meta Platforms (META) grow 20% this year. Monday saw Meta stock rise. Meta was named a high pick by Mizuho analysts led by James Lee in a new client note. Facebook's 575 price target was maintained by analysts. The goal implies an 18% gain from Meta stock's Friday closing price.

"Improving monetization in Reels, geographic expansion and Amazon partnership of Shops, and unified ranking to optimize video placements give us incremental confidence in our above-the-Street revenue growth of 20%," Lee said. Meta stock rose 2.6% to 496.98 today.

Meta sales should rise. In 2024 FactSet reports Mizuho's 20% 2024 Meta revenue growth projection above expert consensus of 17%. Meta sales rose 15.7% to $135 billion last year. Revenue fell 1.1% in 2022.

The memo suggested improved Reels short-video ad pricing might boost Meta's sales this year. Meta recently announced its plan to employ generative AI to improve video recommendations on Facebook and its apps, including Instagram.

Facebook Shops, a commercial online storefront, is also attractive to Mizuho. Last month, CEO Mark Zuckerberg stated the product's fourth-quarter 2023 run-rate was $2 billion.

Meta added Amazon account linking to Facebook and Instagram in November. Users can buy Amazon adverts from social media without leaving. Mizuho's recent analysis suggested Amazon "one-click shopping" on Meta's platforms could change user behavior.

"We believe the in-app purchase integration with the largest e-commerce company globally could represent the tipping point of transforming social media into a transaction platform, changing user behavior at scale, and shifting more retail media spending into Meta," Lee said.

The Mizuho research warned that Meta's investments in AI processing processors and data centers could limit its stock upside. Meta has "ample flexibility" to reduce other costs, like metaverse product investments, Lee stated.

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