Meta ‘s tightening its belt and has business improvements that may not be fully appreciated, Morgan Stanley said. Analyst Brian Nowak upgraded the stock to overweight from equal weight. Nowak also raised his price target by $60 to $250, implying an upside of 26.4% from Monday’s close. “We are taking a more conservative approach with forward ad growth and if the consumer does weaken, we think META is better positioned than GOOGL (which hasn’t reduced costs as aggressively) and AMZN (where retail profitability improvement is partially predicated on growing consumer spend and macro uncertainty could push out the AWS growth improvements),” Nowak said in a note to clients Tuesday. The stock advanced 2.% in Tuesday’s premarket. It’s up 64.4% this year. Nowak said the Facebook parent’s plans to increase efficiency should help by prompting “a structural and cultural pivot to operate leaner and with a greater focus on investor returns.” CEO Mark Zuckerberg has deemed 2023 the “year of efficiency,” with plans that include a round of 10,000 layoffs and a refining of the distributed work model. Nowak said he’s hopeful the plan signals to other technology companies to get more disciplined on spending. Meanwhile, revenue and engagement trends are improving, with Nowak pointing specifically to Reels as an area seeing bettered engagement and monetization. The company’s investments in artificial intelligence should further help Reels, he said. Nowak expects Reels to generate $18 billion in revenue in 2024, which would mark an increase of 115% from $8 billion in 2023. All other Meta revenue should decline by 1% in 2023, but grow 5% in 2024. And he said AI’s potential benefits to the company may not be fully appreciated yet, nor have the potential for paid verification services or click-to-message advertising revenue. Still, he noted the stock’s performance could be impacted by changes to the consumer, regulation, how the company moves on Reality Labs and its capital intensity. In addition to raising the price target, he also raised the 2024 expected EBITDA by 7%. The new price target implies a 9 times 2024 EBITDA multiple, which is a 20% historical discount. The stock should also have a 17 times price-to-earnings multiple in 2024, which would imply a 15% historical discount. — CNBC’s Michael Bloom contributed to this report.