Shares in Alphabet have lagged behind some Big Tech peers, but the owner of Google and YouTube may be poised for gains as analysts turn more bullish on the stock ahead of second-quarter earnings.
Alphabet (ticker: [Class C]
GOOG
and [Class A]
GOOGL
) has been on a roll, it’s true—the shares have advanced 41% so far this year—but the stock is in a bit of a holding pattern, edging up just 1.3% in the last month. It’s an underperformance of some peers, with the
Nasdaq 100,
which tracks the biggest stocks in the tech-heavy
Nasdaq Composite,
up 44% in 2023 and 4.3% over the past month.
But analysts’ action suggests the stock could be ready for another leg higher.
Alphabet is a favorite on Wall Street, garnering an average rating of Buy among almost 50 brokerages surveyed by FactSet, but analysts have recently turned even more optimistic on the tech giant. While the consensus price target on Alphabet implies upside of just north of 8% from current levels, there has been a wave of revisions in the past week calling for much more substantial gains.
Seven analysts have raised their expectations on Alphabet’s stock price since July 12, with the average gain implied by this cohort of targets being some 16% from Monday’s closing price of 125.06 for the Class C stock.
One of those analysts, Justin Patterson of KeyBanc Capital Markets said in a Monday note that the second quarter “likely marks the beginning of a re-acceleration” for Alphabet.
KeyBanc sees upside to the consensus for second-quarter earnings per share, forecasting EPS at $1.38 versus the average estimate of $1.34.
Likely to drive profit gains for Alphabet, Patterson said, is a recovery in both the Search and YouTube businesses as well as the impact of cost-saving initiatives. KeyBanc also raised its outlook for 2023 and 2024 annual earnings per share.
It may be just the beginning of upward revisions for Alphabet heading into the group’s second-quarter earnings. The stock could follow, and close that underperformance with the wider Nasdaq 100.
Write to Jack Denton at [email protected]
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