Trade of the day: Alphabet

As of the end of January, 48 analysts covering Alphabet advise that the firm will outperform the market this year. The average price target is $1,212, representing a 2.1% increase from its current price, whilst the highest price target is $1,350, representing a 13% upside to its current price.

Google parent, Alphabet, is due to report its fourth quarter results, after the market close, on Thursday 1st February. Wall Street is expecting the internet giant to report gross revenue of $31.57 billion and net revenue of $25.54 billion. Meanwhile GAAP EPS is forecast to hit $9.99 after reaching $9.36 last year. Despite the stellar results so far, Alphabet are expected to end the financial year on a high, with ad revenue expected to remain solid, whilst the weaker dollar and corporate tax cut should also give the firm a strong outlook. 

Google has dominated online search for years and there is still next to no competition for the tech giant in this field. The digital ad business is going strong, Alphabet has the escalating cloud business and potentially huge self-driving business, booming smart home business and its move into streaming TV with Youtube TV, could potentially explode overt the coming years as some see this as the Netflix of live TV. 

Strong uptrend 

There is no denying that Alphabet has had a phenomenal 2017, jumping 30% cross the year outperforming the S&P500 by 16%. So far it has started 2018 on an equally strong footing, rallying over 10% in January, reaching yet another record high on Friday of $1186.75. The 20 SMA, 50 SMA and 200 SMA all confirm a strong uptrend. 

Whilst Alphabet’s valuation is high with P/E ratio hitting close to 40%, investors have continually proved that they are willing to look beyond this and push the stock higher, mainly due to strong future earnings estimates. Whispers from Wall Street are hinting at a beat on earnings in the region of $10.35 which could lead to a short-term rally towards the end of the week. Meanwhile with investors turning their attention towards YouTube TV and its potential then over the medium-term Alphabet could be on the rise as well. 

Price target 

As of the end of January, 48 analysts covering Alphabet advise that the firm will outperform the market this year. The average price target is $1,212, representing a 2.1% increase from its current price, whilst the highest price target is $1,350, representing a 13% upside to its current price.

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