Technology

Analysts Predicting Solid Earnings for Alphabet to Start 2018

Jon C. Ogg

Published: January 22, 2018 3:03 pm

Last Updated: January 12, 2020 4:15 am

Alphabet Inc. (NASDAQ: GOOGL) is set to report its fourth-quarter earnings on February 1, after the close of trading. If Wall Street’s forecasters are correct, then investors are bracing for solid earnings and looking for language to be signaling guidance for 2018 as a whole.

24/7 Wall St. has tracked numerous analyst calls where formal ratings and/or price targets have been raised ahead of the search giant’s earnings report.

When analysts start piling on top of each other with upgrades and price target hikes in January, it is generally understood that this implies a solid barometer for how earnings will beat expectation and guidance will be for the year ahead. After all, this is when analysts tend to make their biggest changes and it is frequently when they begin issuing longer-term estimates.

As far as Alphabet is concerned, its stock recently hit new highs and it was up 8.5% so far in 2018 as of Friday’s close. And shares were up over 1% more at almost $1,159 on Monday’s afternoon trading.

These are some of the key Alphabet analyst upgrades and price target hikes seen since the start of the year:

• KeyBanc Capital Markets (Outperform) raised its target to $1,280 from $,1150 on January 19.
• MoffettNathanson raised its target price to $1,275 from $1,175 on January 17.
• SunTrust Robinson Humphrey (Buy) raised its target to $1,250 from $1,180 on January 12.
• Morgan Stanley (Overweight) raised its price target to $1,210 from $1,150 on January 12.
• Cowen (Outperform) raised its price target to $1,230 from $1,150 on January 4.

For some balance, CFRA (S&P) has only a Hold rating and it sees a 12-month target price down at $1,100.

One key aspect for 2018 will be how the company the rest of us still want to call Google outlines its charges for the repatriation and territorial tax implications under tax reform. Alphabet is one of just 16 non-financial companies which have a cumulative $1 trillion in cash. And Jefferies has Alphabet in its top 10 internet predictions for 2018.

On last look, the Thomson Reuters consensus analyst estimates were for Alphabet to report revenues of $110.38 billion and earnings per share of $32.33 for all of 2017. Analysts also expect a full-year tax rate of only 18.2%. Those estimates out in 2019 are for revenues to grow to over $153 billion and for earnings per share to go to almost 449 per share.

For the fourth quarter of 2017, the consensus analyst estimates are $31.8 billion in revenues and $10.00 in earnings per share.

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Alphabet’s $1,159 price target was against a consensus target price of $1,211.05 on last look. That consensus target was closer to $1,178 just 30 days earlier and to $1,104 just 90 days ago. Alphabet now has a $800 billion market cap.