KeyBanc raises estimates on Alphabet, Meta ahead of earnings By Investing.com

Investing.com — KeyBanc Capital Markets has raised its earnings estimates and price targets for ad-focused companies, including Alphabet (NASDAQ:), Meta Platforms Inc (NASDAQ:), Pinterest (NYSE:), and The Trade Desk (NASDAQ:) ahead of their Q3 2024 earnings.

“Our checks suggest the ad market remained solid in 3Q,” analysts said in a Tuesday note. This, coupled with more favorable movements in several key currencies, should drive upside to consensus revenue and profitability forecasts for these companies.

For Alphabet, KeyBanc maintained its Overweight rating and held its price target at $200. The company’s Q3 revenue is expected to come in at $86.6 billion, with EPS of $1.86, a slight increase from earlier projections.

“We view Alphabet as more of a “grind higher” story that should benefit over time from: 1) clarity on antitrust rulings; 2) ongoing cost reduction initiatives; and 3) Waymo entering the valuation,” KeyBanc’s note states.

Meanwhile, Meta saw a notable increase in its price target, raised to $655 from $600, as KeyBanc expects continued strength in ad revenues driven by AI advancements and progress in Facebook Reality Labs.

Meta’s Q3 revenue is forecasted at $40.7 billion, exceeding the consensus estimate of $40.1 billion. EPS estimates were also raised by 5.5% to $5.39.

Looking ahead, KeyBanc sees Meta’s earnings growth accelerating through 2026, with EPS potentially reaching $28 per share as AI returns are realized and operating losses at Facebook Reality Labs moderate.

Pinterest also received an upgrade, with KeyBanc lifting its price target to $45 from $42. The firm noted that Pinterest has the most upside heading into Q3, thanks to favorable foreign exchange trends, solid engagement, and the launch of new product features like Performance+, which could provide a multi-year growth tailwind.

“We raised our 2H estimates to reflect a stronger ad market during 3Q and contributions from Performance+,” analysts noted. KeyBanc’s 2025 and 2026 revenue and EBITDA estimates for Performance+ were also lifted.

Moreover, Pinterest’s first holiday season with Amazon (NASDAQ:) and Google monetization is expected to drive stronger margins, with the company well-positioned for 300 basis points of annual margin expansion.

Lastly, the investment firm lifted its The Trade Desk price target to $130, reflecting expectations for strong Q3 results, with revenue projected at $623 million, slightly above the consensus estimate of $620 million.

KeyBanc also raised its 3Q and 4Q estimates “to reflect a strong ad market and ongoing share gains,” as well as 2025 and 2026 estimates for revenue and EBITDA.