- Credit Suisse analyst Stephen Ju slashed the price targets on two Big Tech companies ahead of their quarterly earnings.
- Ju cut the price target on Alphabet Inc GOOG GOOGL Google to $3,450 from $3,500 (34.3% upside) and kept an Outperform rating.
- Ju maintained Outperform rating based on: 1) ongoing monetization improvements in Search through product-/AI-driven updates, 2) greater-than-expected revenue contribution from non-Search businesses (YouTube, Cloud, and Play), 3) optionality/shareholder value creation from new monetization initiatives such as Maps, Discover tab, as well as the eventual commercialization of Other Bets.
- Ju continues to gather advertiser feedback suggesting raised spend allocation across Google properties given lingering IDFA-related headwinds.
- While he has otherwise left his FXN growth estimates unchanged, Ju believes Q1 results should exceed consensus once again.
- Ju slashed Meta Platforms Inc's FB price target from $336 to $272 (40.5% upside) and maintained an Outperform.
- Meta maintained the Outperform based on: the potential for better-than-expected ad revenue growth on product innovation (Facebook Shops, Search in Marketplaces, etc.), conservative Street models underestimating the long-term monetization potential of other billion-user properties like Messenger and WhatsApp, optionality for faster FCF growth on greater efficiency on content screening/security costs.
- Near-term checks indicate in-line ad revenue with minor adjustments to the 1Q22 revenue projections.
- Ju chose to decrease the ad revenue forecasts for 2023-beyond to contemplate mid-to-high teens nominal dollars of growth every year.
- Price Action: GOOG shares traded lower by 2.39% at $2,503..56 on the last check Thursday.
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