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Alphabet Analysts Emphasize Bullish Stances, Raise Price Targets After Q2 Beat

Alphabet Analysts Emphasize Bullish Stances, Raise Price Targets After Q2 Beat

Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) reported a strong second quarter Monday, with revenue rising 26 percent to a record $32.7 billion. The stock was trading up Tuesday after the reported revenue surge, which came largely due to strong ad results in mobile, YouTube and paid consumer shopping advertising.

The Analysts

KeyBanc Capital Markets analyst Andy Hargreaves reiterated an Overweight rating on Alphabet with a price target lifted from $1,230 to $1,430.

Stifel analyst Scott Devitt reiterated a Buy rating and raised the target price from $1,234 to $1,456. 

Cowen analyst John Blackledge reiterated an Outperform on Alphabet and upped the price target from $1,350 to $1,420. 

The Thesis

KeyBanc's Hargreaves continues to recommend the stock.

“Alphabet continues to invest heavily in front of large growth opportunities. We believe strong growth potential remains in opportunities with cloud, hardware, YouTube, Waymo and Other Bets, which should add significant value over time,” the analyst said. 

One key growth opportunity lies in Alphabet’s investment endeavors in markets like cloud, internet video, self-driving cars, hardware and health care, Hargreaves said. 

Despite the "massive" spending, Alphabet's investment is justified by its growth opportunity, in KeyBanc's view. 

Stifel's Devitt said Alphabet seemed "upbeat" on the company's outlook.

Google's mobile ad boom is expected to continue to thrive, and cloud growth should increase as well, the analyst said.  

Loup Ventures managing partner Gene Munster said artificial intelligence is increasingly incorporated in Google's overall success plan. 

The Q2 call had the "clearest examples yet of how the company is weaving AI into its existing products, as well as the corresponding expenses of doing so," Munster said. "Some tangible examples from the call related to AI include: driving increased relevancy in Search that shows up in the growth of paid clicks."

AI is beginning to show measurable results, and these interactions make searches more simple and relevant for users, Munster said. 

Tigress Financial analyst Ivan Feinseth said not even the European Union's $5-billion antitrust fine against Google can slow the company down.

“I believe Alphabet’s dominant position in desktop and mobile search and the ongoing acceleration in its cloud products offering will continue to drive the stock higher. I would be a buyer at current levels as I believe further upside exists," the analyst said. 

Price Action

Alphabet shares were trading up 4.34 percent to $1,263.58 at the time of publication Tuesday. 

Related Links: 

Alphabet Is Still In Very Early Stages, Morgan Stanley Says

Upcoming Earnings: Alphabet's $5 Billion Fine to Weigh on Results

Latest Ratings for GOOG

May 2019MaintainsBuy
Feb 2019MaintainsOverweightOverweight
Feb 2019MaintainsBuyBuy

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