Jefferies called Meta stock a better idea after an 18% decline. Why should you buy them?

Shares of Meta Platforms, which owns Facebook and Instagram, are now trading at an attractive price after falling 18% in three months, according to Jefferies. He gave five reasons why investors should take advantage of the fall and buy the securities: one of them is the expectation of growth of the securities after the release of a new model of artificial intelligence. Meta's potential now outweighs the risks, the bank believes.

Jefferies analyst Brent Till reiterated a buy recommendation on Meta Platforms shares and called them his "top pick," CNBC writes. Till's $910 target price implies a potential upside of about 48% from the closing price on Wednesday, January 21.

The current value of Meta's securities looks attractive after the correction, Till believes. Over the three months from the last report in late October to the close on January 21, the stock lost 18% of its value.

Investors reacted positively to the expression of confidence on the part of Jefferies. In trading on January 22, shares of the owner of Facebook and Instagram were up 5.6% to $647.36.

Till noted that the fall in Meta securities over the past three months creates "an attractive risk-return ratio." By comparison, Amazon shares are up 4% and Alphabet securities are up 18% over the same period, MarketWatch wrote. "While this decline reflects investor concerns about margin pressure, rising capital costs and the implementation of an AI strategy, it also creates significant upside potential if Ma manages these factors - which we believe is likely," Till wrote in a note cited by CNBC.

The analyst believes that Meta's earnings forecasts will be revised upward during the current year. According to him, "the fourth quarter [2025] was the worst phase of the stock sell-off and investor sentiment should improve on the back of the expected release of a new artificial intelligence model in the first quarter of 2026." "We see limited downside from current levels, with revenue growth and further efficiency improvements should offset cost increases," he added.

The analyst also praised the "stellar AI hires," adding that Meta now has all the key ingredients to scale AI - "computing resources, users and data." Till believes AI will continue to support the company's core advertising model. But at the same time, he pointed to additional potential revenue sources for Meta. For example, the company is making "mega investments in WhatsApp's AI features": the platform could scale to $36 billion in revenue by 2029 versus $9 billion today, Till noted. He also pointed out that social network Threads, which competes with Elon Musk's X, has begun actively monetizing through advertising. In addition, Meta may introduce paid features for its Llama family of neural networks and other AI products in the future, according to Till.

UBS analyst Stephen Jim reiterated a buy recommendation on Meta shares on Jan. 20, but lowered his target price from $915 to $830. Advertisers, surveys show, are not yet planning to cut digital advertising budgets, and Meta continues to gain market share, Jim noted. He expects the company to give investors a clearer picture of its operating expenses and capital expenditure plans for 2026 in its fourth-quarter 2025 earnings report, expected on Jan. 28.

On the other hand, the risk to Meta stems from investor concerns about its own AI models, which are inferior to developments by Anthropic, Google and OpenAI in independent performance rankings, UBS noted. "Investors remain concerned that Meta may not achieve additional revenue growth at all if model development stalls," Jim wrote.

Wedbush analyst Scott Davitt on Jan. 21 reiterated an Outperform rating for Meta's stock, matching a buy recommendation on the stock, and maintained a target price of $880. "Steady trends in digital advertising and comments from management inspire confidence despite growing investor caution about large-scale investments in AI and infrastructure," Davitt wrote in a note cited by Investor's Business Daily.

The analyst added that "the risk-to-potential return ratio looks attractive given the strong fundamentals and future monetization opportunities of AI."

Most analysts, according to MarketWatch, advise buying Meta shares: they have 66 Buy and Overweight ratings out of 72 total. At the same time, the remaining six recommend holding (Hold). The consensus target price is $834.7, up 36% from the closing price on January 21.

This article was AI-translated and verified by a human editor