Meta (META) shares climbed 1.2%, leading the “Magnificent Seven” stocks higher alongside Amazon (AMZN).
The gain came after the Facebook parent’s stock was upgraded to Hold from an Underperform rating by Needham analyst Laura Martin.
Martin cited strength in Meta’s labor productivity, measured by free cash flow per full-time employee.
“Our upgrade to Hold is driven by our latest labor productivity research that shows that META has had among the strongest labor productivity metrics for the past 4 years,” she wrote.
In its fiscal year 2024, Meta had a free cash flow of over $730,000 for every full-time employee. That was followed by Apple’s $663,457, while the average for big-cap companies covered by Martin was nearly $302,000.
Martin said she remained at a Hold rather than a Buy rating partly due to the “uncertain” return on Meta’s growing capital expenditures, which have been driven by its investments in AI. Martin said “the larger the spending, the more likely there is waste, in our view.”