The latest round of job cuts at Meta Platforms is boosting Wall Street’s confidence in the upside potential for earnings in the months and year ahead. The social media giant on Tuesday said it would slash 10,000 roles and close 5,000 open positions as it focuses on cost cutting. It’s another round of eliminations after Meta’s announcement in November that it would be laying off 13% of its workforce. CEO Mark Zuckerberg has labeled 2023 as the “year of efficiency” for Meta as it seeks to reassure fearful investors that it can control its spending after pouring resources into its metaverse investment. Despite the blow to workers, Wall Street views the latest round of layoffs as a sign that Meta Platforms is following through on these efficiency plans. Analysts expect the company to continue slashing costs, which should provide upside to estimates going forward. Bank of America’s Justin Post raised his 2024 earnings per share estimates on Meta by 4%, and lifted his price target to $230 from $220. Post called the company in a Tuesday note a “rare EPS upside story,” saying that the cuts should set Meta up to generate higher profitability once the economy reaccelerates. “With reduced costs, increasing Reels monetization and AI/ML benefits, we believe Meta’s topline and bottom-line could grow faster than the broader market over the next 3-5yrs,” he wrote. Wells Fargo’s Brian Fitzgerald also lifted the investment bank’s price target to $280 from $250 a share, implying about 44% upside from Tuesday’s close. Job cuts could occur in the company’s Reality Labs division, signaling Meta’s shift from a focus on the metaverse to artificial intelligence, said Jefferies analyst Brent Thill in a Tuesday note. “On top of this division having the most limited impact on the company’s growth, we believe that these cuts are a sign that META is reprioritizing from the Metaverse towards AI,” he wrote. Thill also views the risk-reward for shares as attractive from here, expecting positive upward EPS revisions over the next few quarters. Although Wall Street broadly praised the latest efficiency move from Meta, some analysts say there’s more work to do. Mizuho’s James Lee noted that metaverse investments still account for a large chunk of revenues, while research and development expenses as a percentage of revenues are higher than those of its peers. Bernstein’s Mark Shmulik expects investor attention to refocus on Meta’s growth story now that it’s a “leaner, meaner company,” with most cost reduction efforts already priced in. “Only time will tell if the company’s productivity improvements scale, or if morale breaks with employee job security unclear for the rest of the year,” he said in a Wednesday note to clients. “But it’s hard not to back a CEO who seems reenergized on reshaping the company in his image.” — CNBC’s Michael Bloom contributed reporting