Alphabet’s stock is falling, reversing the small gains seen immediately after better-than-expected second-quarter results, although analysts praised it.
Google’s parent company (code name: GOOGL) beat lowered top and bottom line expectations in the latest report, while highlighting the substantial growth in revenue from its cloud division and a new $28 billion stock repurchase program.
The stock’s initial gain was the smallest of the four large technology companies reported on Thursday night. Investors may be concerned about the fact that revenue declined during the quarter. From four perspectives, Alphabet is just one of them, Apple (AAPL), Facebook (FB) and Amazon.com (AMZN) are the others-seeing revenue shrink.
This is the first time sales have fallen.
Despite this, several analysts raised their price targets on Friday. Michael Ripps of Canaccord Genuity reiterated the buy rating and raised the price target by $100 to $1,800. “[W]With a strong competitive position, fast-growing market segments like Cloud&Play are becoming more and more important, and growth expectations are quite moderate…and the valuation is reasonable. We advocate increasing positions at the current level. “He wrote.
Mark Mahaney of RBC Capital Markets maintained an Outperform rating and raised its target stock price by $200 to $1,700. He said: “Although the recovery curve is slightly longer, we still believe that Google (and Amazon.com (AMZN) and Facebook (FB)) are the most resilient’net advertisers’.”
Youssef Squali of SunTrust Robinson Humphrey reiterated the buy rating and raised its target price from US$1,805 to US$1,850. He wrote: “Although the trends in the second and third quarters indicate that the demand environment is improving, Google still shows a convincing valuation, despite its first decline in revenue, despite its first decline in revenue.”
Not surprisingly, many analysts are on the optimistic side: According to FactSet data, 88% of analysts have a buy or equivalent rating on Alphabet, and the remaining 12% are on the sidelines. There are no bearish calls for stocks. Although the bullish sentiment has weakened. At the beginning of 2019, 98% of analysts rated Alphabet as a buy.
Alphabet fell 4.5% to $1,468.99 in afternoon trading; the stock has risen nearly 10% since the beginning of 2020. This puts it far ahead of the broader market, which is hovering near the break-even point, but makes the stock the worst performer among FAANG stocks. Apple, Amazon, Netflix (NFLX) and Facebook all achieved double-digit growth, as did Microsoft (MSFT).
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