04:05 PM EDT, 10/22/2024 (MT Newswires) -- Meta Platforms ( META ) will likely exceed expectations when it reports third-quarter results next week amid advertiser gains and accelerating reels monetization, BofA Securities said Tuesday.

The brokerage is modeling for revenue of $40.36 billion and earnings per share of $5.35, ahead of consensus estimates of $40.2 billion and $5.19, respectively. The parent of Facebook and Instagram is scheduled to report earnings for the third quarter on Oct. 30.

The beat is expected to reflect Meta's ongoing efforts to improve return on investment. The company's artificial intelligence tools and customer relationship management integrations will likely drive "higher ROI and incremental ad spend," analyst Justin Post wrote.

BofA is modeling for third-quarter advertising revenue of $39.59 billion, implying growth of 20% excluding foreign exchange on a year-over-year basis, though a slight deceleration from the second quarter's pace of 23%. Meta could additionally see a political ad spend benefit of 100 to 200 basis points, according to BofA.

Increased AI tools are additionally fueling the monetization of reels, according to Post. The company in September added several new AI-powered advertising tools that include new ad format features with personalized discounts, reminders about sales and events, and multiple landing pages in a single video.

Global daily active Instagram users were likely up 5% year over year in the third quarter but flat sequentially, BofA Securities said, citing Sensor Tower data. For average time spent per user, data suggest "industry leading growth at Instagram likely aided by Reels and AI driven content targeting, while Facebook could be seeing modest decline," Post said.

The social media giant could lower the upper-end of its 2024 expense guidance by $1 billion to range between $96 billion and $98 billion, which would be below the consensus projection of $98.2 billion, according to the brokerage. The brokerage reiterated a buy rating and a $630 price target on the stock.

With Meta's average number of job openings down quarter to quarter and recently reported layoffs, "we think costs for 2024 could be below estimates," Post said.

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