These 7 Analysts Have Very Different Takeaways From Alphabet's Q2 Print

Google-parent Alphabet Inc GOOGL GOOG reported quarterly revenue at $69.7 billion, up 13% year-over-year but short of Street expectations of $69.88 billion. The company’s profits fell to $16 billion, or $1.21 per share, below the consensus estimate of $1.29 per share.

Raymond James On Alphabet
Analyst Aaron Kessler maintained an Outperform rating while lowering the price target from $159 to $143.

“Alphabet reported mixed 2Q results though much better than feared with continued Search strength (14% y/y) driven by travel and retail,” Kessler said in a note. “YouTube results (+5% y/y) were lower than expected as some advertisers slowed spend,” he added.

RBC Capital Markets On Alphabet
Analyst Brad Erickson maintained an Outperform rating and a price target of $135.

Alphabet’s results were better than feared, even against macro uncertainties, “with search upside offset by slight YouTube, Cloud & Other revenue softness,” Erickson said in a note. “To us, the report further cements GOOGL's place as the highest quality name in a very challenged space though we'd continue to flag that Street out-year estimates appear too high which will have to be addressed,” he added.

Check out other analyst stock ratings.

Morgan Stanley On Alphabet
Analyst Brian Nowak reiterated an Overweight rating while raising the price target from $140 to $145.

The company’s second-quarter results were “strong,” and “higher revenue flowed through to EBIT too, as ~$19bn of GAAP EBIT was ~8% better than modeled,” Nowak said in a note. The analyst added, however, that Alphabet continues to “face an uncertain and rapidly-evolving macro environment.”

JMP Securities On Alphabet
Analyst Andrew Boone maintained a Market Outperform rating while keeping the price target unchanged at $160.

Alphabet’s quarterly results were better than feared, Boone said. “Our primary takeaway is that search’s demand is persistent even in a tough macro advertising environment given its consistent and high ROI while benefiting from its diversification across online and offline as well as across verticals and geographies,” the analyst wrote.

Wells Fargo On Alphabet
Analyst Brian Fitzgerald reiterated an Overweight rating while reducing the price target from $170 to $160.

Although Alphabet’s results were “mixed,” they demonstrated “more resilience than might have been expected from last week's 2Q Internet earnings” from Snap Inc SNAP and Twitter Inc TWTR, Fitzgerald said in a note.

“We were also encouraged by mgmt tone against the current macro backdrop, and believe mgmt is striking the right balance between a sharper near-term cost focus and continued investment for the long term,” the analyst added.

KeyBanc Capital Markets On Alphabet
Analyst Justin Patterson maintained an Overweight rating and a price target of $125.

“Search drove performance, YouTube and Cloud both decelerated, and share repurchases helped mitigate the degree of y/y EPS declines,” Patterson said in a note.

“Given peak margins and slower growth ahead in Search, we continue to view the business as having muted EPS growth in 2023E, before returning to a low- to mid-teens growth profile in 2024E,” the analyst added.

BofA Securities On Alphabet
Analyst Justin Post reiterated a Buy rating, while lowering the price target from $132 to $125.

“While 2Q results were soft vs. Street, Alphabet results & commentary suggest relative revenue stability with search up 14% y/y & YouTube up 7% q/q,” Post said in the note.

Although concerns remain, with “search facing minimal competitive risks, more expense flexibility than peers, healthy margins that will minimize cash flow concerns, and opportunity to support stock with buybacks we see Alphabet as a defensive stock with valuation support,” the analyst further mentioned.

GOOGL, GOOG Price Action: GOOGL shares had risen by 6.51% to $111.86 and GOOG shares are up 6.49% at $112.28 at the time of publication Wednesday.

Photo: Piotr Swat via Shutterstock