Meta Platforms offers an attractive entry point following its recent pullback, according to Jefferies. In a Wednesday note, the firm outlined five reasons why investors should buy the stock at its current valuation. Jefferies reiterated its buy rating on shares of Meta and listed the stock as its top pick. Shares of Meta have slipped 7% in January and 16% over the past three months. However, analyst Brent Thill's $910 price target implies a 48% upside from where the stock closed on Wednesday. META 1Y mountain META 1Y chart Thill noted that Meta's 18% drop since its earnings has created an attractive risk-reward ratio. By comparison, in the same time period Amazon and Google have gained 4% and 18%, respectively, he wrote. "While this reflects concerns around margin pressure, capex ramp, and AI execution, it also creates meaningful upside if META addresses these headwinds — which we believe is likely," Thill said. Thill added he remains optimistic about Meta's potential positive estimate revisions through 2026. He thinks that the fourth quarter was the worst of the sell-off, and that sentiment should improve with the company's expected new model release expected sometime in the first quarter of 2026. "We see limited downside from here, with upside driven by topline strength and continued efficiency gains offsetting opex growth," he added. Thill also applauded Meta's recent "all-star AI hires," which should now allow the company keep up with its peers. Moreover, he added that besides talent, the company now has all the key ingredients for AI — computing power, users and data. Jefferies also said AI can continue to drive Meta's core advertising flywheel in 2026. "META is confident in its strong pipeline and ability to keep stacking AI gains in core recommendation and conversion systems in 2026," he wrote. "META is also leveraging Gen AI to power its core flywheel, supporting ongoing growth." Finally, he highlighted various incremental revenue engines, including WhatsApp, Threads and Llama, Meta's foundational large language model. The company is injecting "mega AI investments" into WhatsApp, and Thill said the platform has the potential to scale to $36 billion of revenue by 2029 versus $9 billion today. He noted that Threads, Meta's version of X, is starting to ramp ad monetization, while he wouldn't be surprised if Meta introduced paid features for Llama or other AI offerings in the future.
