Meta stock could surge 25% as TikTok rival Reels and engagement show improvement, Morgan Stanley says

• Morgan Stanley upgraded Meta stock to overweight and raised its price target to $250 from $190.
• It cited the company's efficiency, revenue and Reels engagement as contributing factors.

Meta Platforms earned a bullish upgrade and price target increase from Morgan Stanley analyst Brian Nowak.

In a note published Tuesday, he put shares at overweight and lifted his price target to $250 from $190, representing 25% upside from current levels.

Nowak changed his outlook on the social media conglomerate came after noting its increasing efficiency as well as improving trends in revenue, engagement and the success of Instagram Reels — a short-form video tool competing with TikTok.

Meta stock rallied earlier this month on reports that the US could ban TikTok amid growing allegations that the China-based app collects user data and poses a national security risk.

Nowak also pointed out Meta's artificial intelligence development, subscriptions, and click-to-message ads as further positives for bullish investors.

In addition, the Facebook and Instagram parent is positioned to keep performing well despite weakening consumer demand due to aggressive cost reductions and a business model that is not predicated on consumer spending, he added.

Even though Meta stock has risen approximately 120% since November, Nowak still sees upside, saying that it trades at a 33% discount on a growth-adjusted basis.