Shares in Alphabet, the parent company of Google and YouTube, have seen a bit of a slowdown compared to other Big Tech peers. While the stock has advanced 41% this year, it has only edged up 1.3% in the last month, underperforming the Nasdaq 100. However, analysts’ recent actions suggest that Alphabet’s stock may be ready to climb higher.
Alphabet is already a popular investment on Wall Street, with an average rating of Buy among nearly 50 brokerages surveyed by FactSet. But analysts have become even more optimistic about the tech giant recently. While the consensus price target implies a modest 8% upside from the current levels, several analysts have revised their expectations, calling for much more substantial gains.
In fact, seven analysts have raised their expectations on Alphabet’s stock since July 12. On average, this group of targets suggests a potential gain of around 16% from Monday’s closing price for the Class C stock.
One analyst, Justin Patterson of KeyBanc Capital Markets, believes that the second quarter will likely mark the beginning of a re-acceleration for Alphabet. KeyBanc also sees upside potential for second-quarter earnings per share, forecasting a higher EPS of $1.38 compared to the average estimate of $1.34.
Patterson points to a recovery in both the Search and YouTube businesses, as well as the impact of cost-saving initiatives, as drivers for profit gains at Alphabet. KeyBanc has also raised its outlook for 2023 and 2024 annual earnings per share.
With these upward revisions and expectations for the upcoming second-quarter earnings release, Alphabet’s stock may catch up and close the performance gap with the wider Nasdaq 100.
