Key points
- Evercore ISI kept its Outperform rating and $860 price target on Meta (META) after Wednesday's up-to-$18 billion teen-safety settlement, and Bank of America stayed at Buy with an $810 target.
- Evercore's argument: the stock was cheap because of two separate concerns, legal and capex, and the settlement resolves the first one.
- Meta rose about 1.3% to around $578 and faded from an intraday high near $593, a market treating the news as one problem solved, not two.
Here is the thing about Meta (META). The stock has been out of favor for months, and investors have not agreed on why. Some were fixated on the lawsuits. Others were fixated on the spending. Evercore ISI says pick one, because Wednesday only addressed the first.
Meta settled the teen-safety cases for up to $18 billion over the next decade, and Evercore reiterated its Outperform rating and $860 target in response. The logic is straightforward. Two overhangs: legal and capex. The legal one had no ceiling, no fixed number, no end date, and an open-ended liability is something the market cannot price. Now it has a number.
"Our view all along has been that the 2nd overhang was a policy/legal challenge with a policy/settlement solution," the firm wrote. "That solution is here." Evercore called the youth-safety issue "largely resolved," while allowing that the risk is not fully gone.
Evercore is not the only bull. Bank of America analyst Justin Post has kept a Buy rating on Meta with an $810 target, arguing the market has fixated on the legal risk while underrating the company's growth and its expanding AI infrastructure. His view is that with the lawsuits moving toward resolution, product execution and Meta's AI roadmap can carry the stock from here.
The case is fair as far as it goes. A settlement is a settlement. The open-ended courtroom risk that weighed on the multiple just became a defined cost, Meta will cap and curfew teen accounts, and it moves forward. That is one concern down.
The larger one is still parked over the stock. Capex. Meta is spending enormous sums to build AI data centers, and no settlement changes that. Evercore and BofA are both betting the spend pays off, and it may. But if you were worried about how much cash Mark Zuckerberg is committing to compute, you got nothing new on Wednesday. That concern sits exactly where you left it.
The tape tells you the market knows the difference. A genuine all-clear would have produced a bigger move. Instead, Meta rose about 1.3% to around $578 after touching $593 and handing most of it back. That is not a celebration, just a stock crossing one item off a two-item list.
Even the valuation needs a caveat. Evercore leans on a roughly 17-times-earnings multiple it says sits within about 10% of Meta's cheapest level in three years. That is the firm's figure. On trailing earnings, Meta trades closer to 21 times today, so treat the exact number as Evercore's framing rather than a settled fact.
So where does that leave us. One overhang gone, one still very much alive, and a pair of Street targets that only work if the spending eventually earns its keep. The legal fight is settled. It was never the part that mattered most.
