Wells Fargo has revised its outlook on Alphabet Inc (NASDAQ: GOOGL) by lowering the price target for the tech giant's shares to $182.00 from the previous target of $190.00. Despite this adjustment, the firm has maintained its Equal Weight rating on the company's stock.
The change in price target comes as the analyst reassesses expectations for Alphabet's search revenue growth and operational expenses. While maintaining constant foreign exchange (FX) search growth estimates for the third quarter and full year of 2024, the reported search revenue projections have been slightly increased due to FX movements. Specifically, search revenue estimates were raised by 0.7% for the third quarter and 0.6% for the full year.
Looking ahead, the firm has reduced its forecast for 2025 constant currency search growth by 1% to 8%, citing challenges in key business sectors. Additionally, the operating expense projections for 2024 and 2025 have been slightly increased to accommodate the impact of a weakening U.S. dollar.
Despite these adjustments, the operating income margin predictions for 2024 and 2025 remain stable, with a minor decrease of 0.1 percentage points, settling at 31.4% and 31.5% respectively.
The new price target of $182 implies a price-to-earnings (P/E) ratio of 19 times the firm's projected earnings per share of $9.58 for 2026, reflecting the average of the past 24 months.
In other news, Foxconn will host executives from Nvidia, Google, and BMW at its annual Tech Day forum, showcasing new products and partnerships, including the introduction of two new electric vehicle models. Pivotal Research has given Alphabet Inc. a 'Buy' rating, emphasizing the company's dominant position in search and AI, as well as its potential to reduce costs.
InvestingPro Insights
InvestingPro data provides additional context to Alphabet Inc's financial position, highlighting the company's market capitalization of $2.06 trillion and P/E ratio of 23.96. The company's PEG ratio of 0.5 suggests that the stock may be undervalued relative to its growth potential.
Alphabet's revenue growth of 13.38% over the last twelve months and EBITDA growth of 34.59% demonstrate its continued expansion. The company's strong return on assets of 21.97% underscores its operational efficiency.
For investors seeking a comprehensive analysis, InvestingPro offers 8 additional tips that could provide further insights into Alphabet's market position and future prospects.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
Analysis:
The article discusses Wells Fargo's adjustment of its price target for Alphabet Inc, highlighting changes in search revenue growth expectations and operational expenses. Despite the lowered price target, Alphabet's financial position remains stable, supported by strong revenue growth and operational efficiency. Investors may find value in further exploring Alphabet's market position and growth potential.