Expectations that new features coming to Instagram will boost the fortunes of Meta Platforms (FB) encouraged a top investment bank to raise its price target on the social networking giant. Meta stock jumped.
UBS analyst Lloyd Walmsley raised the bank’s price target on Meta, formerly known as Facebook, to 440, from 425, with a buy rating. In October, Facebook changed its name to Meta platforms in a major rebranding.
Meta stock climbed 3% to 333.70, during afternoon trading on the stock market today.
In October, reports surfaced that Facebook-owned Instagram was experimenting with adding new features to the social media app. The goal is to give users more control over what they see while scrolling Instagram.
Then, on Wednesday, Instagram head Adam Mosseri announced in a post on Twitter that Instagram is rolling out big changes to the way the core feed experience works. It lets users choose between three different feeds on Instagram. The changes are “already out or going out over the next few weeks” according to Mosseri.
A Catalyst For Meta Stock
UBS’s Walmsley thinks a revamped scrolling feed has the potential to provide a meaningful product catalyst for Meta stock. If successful, he said in a note to clients, the changes stand to improve the Instagram experience, unlock ad inventory and attract younger users.
“Given Meta’s audience, depth of content, and general execution, we are optimistic of success,” Walmsley wrote. “We think Instagram’s move here stands to drive a large pickup in engagement per user.”
The new Instagram settings would allow users to switch between three different views on their home screen. The settings are titled as “Home — Favorites – Following.”
“We think a 25% engagement lift at Instagram alone and multiple expansion could drive a 40% upside to shares,” Walmsley wrote.
Meta stock is currently hugging its 50-day and 200-day moving averages. The stock is down 13% from a record high set in September.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
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