Meta Screens as Attractive Buffett-Style Buy Amid Ad Revenue Growth
Warren Buffett's investment strategy is often emulated by investors seeking to replicate his success. A recent analysis suggests that Meta (NASDAQ:META) could be an attractive target for a Buffett-style investor at its current price of $556.71.
META trades at a trailing P/E of 21 and a forward P/E of 19, with a PEG of 0.831, making it the cheapest among Apple (NASDAQ:AAPL), Meta, and Microsoft (NASDAQ:MSFT) on trailing earnings. The company's gross margin sits at 82% and return on equity at 29.8%, indicating a strong business performance.
The stock has declined 27.79% over the past year, underperforming the S&P 500. However, analysts remain bullish, with 57 of 63 covering analysts rating Meta a Buy or Strong Buy, and an average target price of $824.68. Ad revenue growth remains strong at 27%, and pricing power is intact.
The analysis cautions that the current setup may be similar to Apple in 2016 when Buffett invested, but also notes that Meta's free cash flow has collapsed from $8.55 billion to $784 million due to increased capex. Reality Labs remains a significant cash sink, and youth-related legal matters could produce further material charges.