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Question asked 10/07/2026

Meta Platforms (NASDAQ: META)

Hi gents Have a question about your positive view on Meta. Think late last week you expressed a view the stock was cheap. However - when I read the most recent note from UBS (think you guys get their research) - I note there is very little EPS growth forecast over the next 3-4 years. Indeed I think EPS is forecast to go down a little bit over that period (FY30 below FY26). They also have a buy recommendation and state the shares offer good value - and their price target is based on paying 26x. Now if we look back over the past 5 years EPS doubled. And so did the share price. Fair enough. But looking forward - if EPS isnt growing - why should the share price - and why is 26x a reasonable multiple given the future appears dramatically softer than recent history? Cheers

Answer

Hi Matt,

Consensus has EPS growing from $32.80 in FY26 to $35.20 in FY27, but as you rightly point out, UBS are saying flat earnings over that time period. The reason being heavy depreciation, infrastructure costs and operating expenditure which should suppress 2027 earnings, but once the investment cycle moderates, or Meta monetises spare compute, earnings could reaccelerate materially.

On UBS’s numbers, Meta is trading on roughly 18–19x 2026 and 2027 earnings at a share price near US$600 (not 26x) – down from mid 20’s where it has generally traded. That looks reasonable for the quality and growth of the core business, but the debate is about capital intensity and free cash flow, rather than top line (revenue) growth, which is expected to accelerate ~25% YoY (based on consensus).

While earnings growth is likely to be low in the next 2 years, the reason to be bullish is that outer years will likely harvest what they are sowing now. EPS in FY29 for example (we know a long way out) is expected to be ~$50.

Hence, we don’t feel too intimidated buying Meta ~US600, especially as the company appears to be looking at commercialising their massive AI spend.

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Meta Platforms EPS – Source Bloomberg

LAST UPDATED 09/07/2026 13:52

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