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Parsing Alphabet’s 4Q17 Results

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Part 4
Parsing Alphabet’s 4Q17 Results PART 4 OF 7

How Wall Street Views Alphabet after Mixed 4Q17

Wall Street is divided on Alphabet’s earnings results

Alphabet’s (GOOGL) 4Q17 earnings results have divided Wall Street. The company reported revenue that surpassed expectations, but its EPS (earnings per share) of $9.70 missed the expected $9.98.

More than ten brokerage firms have either raised their price targets or upgraded their ratings on Alphabet stock since the company reported its 4Q17 earnings on February 1, 2018. At least one brokerage firm has downgraded its rating on the stock since the earnings results were announced.

How Wall Street Views Alphabet after Mixed 4Q17

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Bullish and bearish brokerages

Brokerages that have commented favorably on Alphabet’s prospects include Oppenheimer, Cowen, and Credit Suisse. Oppenheimer raised its price target on Alphabet to $1,340 from $1,180. The firm has an equivalent of a “buy” rating for Alphabet stock.

Bullish brokerages see bright prospects in Alphabet’s investments in areas such as cloud computing, autonomous driving, and hardware.

Brokerages that are bearish on Alphabet include Stifel, which lowered its rating on the stock to an equivalent of “neutral” from a “buy.” Bearish brokerages have cited issues such as Alphabet’s shrinking advertising rates and rising TAC (traffic acquisition costs). The price that Alphabet’s Google charges marketers to advertise on its networks declined 14% year-over-year in 4Q17, but the decline was less than 14.6% that Wall Street was expecting.

Premium price target

On average, Wall Street views Alphabet’s future favorably. The stock has a consensus “buy” rating and an average price target of $1,131.18. At Alphabet’s current share price, the average price target represents a premium.

Facebook (FB), Amazon (AMZN), and eBay (EBAY) also have average “buy” ratings. Twitter (TWTR) and Snap (SNAP) are both rated “neutral.”

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