UBS has reaffirmed its buy recommendation and $715 price target for Meta Platforms Inc. (NASDAQ: META) following the company’s $18 billion settlement with a coalition of 29 U.S. states, underscoring the removal of a major overhang on the stock.
The settlement, announced Wednesday, includes $12.7 billion in guaranteed payments to 51 states and territories over a 10-year period, with an additional $5 billion contingent on competitors YouTube and TikTok adopting similar product modifications. The guaranteed portion represents a fraction of the $200 billion in settlements and fines imposed on the tobacco industry, highlighting the comparatively moderate financial impact on Meta.
UBS analysts noted that the agreement’s long-term product adjustments for teen and minor accounts are less restrictive than structural changes that could have constrained Meta’s targeted advertising capabilities. The firm expects earnings per share to continue rising, supported by above-consensus revenue growth pathways, including expanded monetization via Business Agents and external sales of excess computing capacity.
Meta’s stock, trading at $571.30 at the time of the report, implies a 25% upside to UBS’s target. The firm’s valuation is underpinned by Meta’s robust gross profit margins of 81.75% and a price-to-earnings ratio of 21.76, according to InvestingPro data.
Other analysts have adjusted their targets following the settlement. Rosenblatt raised its price target to $886, while Truist Securities reduced its target to $763 but maintained a buy rating. BofA Securities also reiterated its buy rating with an $810 price target.
The lawsuit, brought by the coalition of states, alleged that Meta’s product design and safety measures for adolescent users caused harm. The settlement resolves state-level claims related to child and teen safety without admitting liability.
