Oppenheimer has reiterated a Perform rating on Meta Platforms Inc. (NASDAQ: META), maintaining a cautious stance even as the company shows strengthening near-term fundamentals. The research house points to a cluster of factors - AI-enhanced engagement, new products and heavier ad load - that have driven what it views as peak fundamentals in the first quarter.
Valuation metrics underline Oppenheimer's caution. According to InvestingPro data cited by the research firm, Meta is trading at a price-to-earnings ratio of 29.65 and a price/earnings-to-growth ratio of 4.21, levels the firm interprets as high relative to near-term earnings growth.
Oppenheimer's analysis also calls attention to Meta's projected revenue trajectory. The firm notes that Meta's implied fiscal year 2026 revenue guidance is 22% to 26% above Street expectations, which are centered on roughly 18% growth. That upside to revenue expectations, the firm says, largely offsets the impact of elevated operating expenses.
Underpinning the optimistic revenue view are several strong operating metrics. Meta's gross profit margin for the trailing twelve months stands at 82.01%, and revenue over the same period is reported as having grown 21.27%. Impressions rose 18% year-over-year in the most recent quarter, improving from 14% growth in the third quarter, with Oppenheimer pointing to engagement as the primary driver. Instagram Reels time spent increased 30% year-over-year, and the firm notes that conversions are growing faster than impressions.
At the same time, Oppenheimer points to meaningful increases in cost lines. Operating expenses are up 41% year-over-year, while capital expenditures have risen 73% year-over-year. The firm suggests investors may be assuming management is prioritizing near-term revenue maximization to justify those sizable increases in operating and capital spending.
On earnings and cash flow, Oppenheimer's GAAP EPS estimates are largely unchanged, but the firm now expects negative free cash flow for Meta both this year and next. The research house says the stock's future direction will be tied to the timing and quality of the company's foundation model.
In related developments, Meta reported fourth-quarter 2025 results that beat analysts' expectations. The company posted earnings per share of $8.88 versus the $8.19 analysts had anticipated. Revenue for the quarter reached $59.9 billion, topping the forecast of $58.35 billion.
Those results helped prompt a separate move by Truist Securities. Following the strong fourth-quarter performance and first-quarter guidance that projects growth of about 30% at the midpoint, Truist raised its price target on Meta to $900 from $875 and retained a Buy rating. The firm noted that the Q1 midpoint growth projection would mark Meta's fastest rate since the third quarter of 2021.
Contextual note - The analysis above reflects the firm-level views and the reported company results cited. It does not introduce additional forecasts or claims beyond the data and commentary provided by Oppenheimer, Truist and Meta's reported quarterly figures.