KeyBanc Increases Earnings Estimates for Alphabet and Meta

KeyBanc Capital Markets has updated its earnings forecasts and price targets for several advertising-focused firms, including Alphabet, Meta Platforms Inc, Pinterest, and The Trade Desk, in anticipation of their Q3 2024 results.

Analysts stated in a recent note that their research indicates the advertising market remained robust in the third quarter. This, along with positive changes in several key currencies, is expected to enhance consensus revenue and profitability projections for these companies.

For Alphabet, KeyBanc confirmed its Overweight rating and maintained a price target of $200. The company’s Q3 revenue is anticipated to be around $86.6 billion, with earnings per share (EPS) expected to reach $1.86, reflecting a slight increase from prior estimates. The analysts view Alphabet’s growth as a gradual improvement trajectory benefiting from clearer antitrust rulings, ongoing cost reduction strategies, and the potential valuation of its Waymo division.

Meta received a significant price target increase, rising from $600 to $655, as KeyBanc anticipates sustained growth in advertising revenue driven by advancements in artificial intelligence and developments within Facebook Reality Labs. Meta’s Q3 revenue is projected at $40.7 billion, surpassing the consensus estimate of $40.1 billion, with EPS estimates raised by 5.5% to $5.39. Looking ahead, KeyBanc expects Meta’s earnings growth to accelerate through 2026, with EPS potentially reaching $28 as AI investments pay off and operating losses at Facebook Reality Labs decrease.

Pinterest also saw an upgrade, with its price target increased from $42 to $45. Analysts highlighted that Pinterest has the most upside going into Q3, thanks to favorable foreign exchange trends, strong user engagement, and the introduction of new product features like Performance+. KeyBanc has raised its second-half estimates to account for a stronger ad market and contributions from Performance+, as well as revenue and EBITDA estimates for 2025 and 2026.

Additionally, Pinterest’s first holiday season collaboration with major platforms is expected to enhance margins, positioning the company for a significant annual margin expansion of 300 basis points.

Finally, KeyBanc raised its price target for The Trade Desk to $130, anticipating strong Q3 performance with projected revenue of $623 million, slightly above the consensus estimate of $620 million. The firm also adjusted its third and fourth quarter estimates to reflect a robust ad market and ongoing market share gains, as well as boosting revenue and EBITDA estimates for 2025 and 2026.