Alphabet (GOOGL) PT Raised to $1,700 at Raymond James Due to Solid Q2 Results and Long-Term Ad Revenue Growth

July 31, 2020 9:48 AM EDT
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Raymond James analyst Aaron Kessler raised the price target on Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) to $1,700.00 (from $1,425.00) while maintaining an Outperform rating citing solid long-term advertising revenue growth expectations, increasing Google Cloud momentum, option value in other areas, and an attractive valuation.

The analyst stated "Alphabet reported largely in-line 2Q results with total FX-neutral revenue flat y/y as strength in Cloud (+43% y/y) and Google Other (which includes Play and YouTube subscriptions +26% y/ y), was offset by pandemic-related declines in search revenue (-10% y/ y). Importantly, Google reported improving trends throughout the quarter (and improvements continuing into July), with Search exiting 2Q roughly flat y/y. The company expressed cautious optimism on the path forward, but noted that ad budgets remain in flux due to continued uncertainty around the macro environment. We maintain our Outperform rating and raise our price target to $1,700 given 1) solid long-term advertising revenue growth expectation driven by search, mobile, and YouTube; 2) increasing Google Cloud momentum; 3) option value in other areas (e.g. Hardware, Other Bets); and 4) valuation remains attractive at ~25x 2021E core EPS ex cash."



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Raymond James, Aaron Kessler