Meta Platforms' (META) settlement of the teen-harm litigation with a coalition of US states clears an investor overhang but leaves concerns over its impact on engagement trends, while other litigation remains pending, Wedbush Securities said in a Tuesday note.

Last week, the social media giant reached a settlement deal with a coalition of 52 state attorneys general, covering up to $18 billion in payouts over 10 years, the brokerage said, noting that $5.3 billion of the amount will be applicable if Alphabet's (GOOG, GOOGL) YouTube and TikTok join the framework.

The settlement also includes changes intended to protect teens' mental health, including daily usage limits and access restrictions during certain hours, Wedbush noted.

The investment firm said the deal could have a limited financial impact as Meta management considers teen monetization to be limited, with teens comprising less than 1% of the company's revenue. Engagement impact, however, could be larger among highly monetized users given the risk of losing engagement and time spent to non-restricted platforms.

Wedbush reiterated its neutral rating on Meta Platforms, with a $595 price target.

Shares of Meta were up 1.2% in Tuesday afternoon trading.

Price: 579.18, Change: +6.84, Percent Change: +1.20