Tuesday, Stifel, a financial services firm, upgraded its stock price target for Alphabet Inc (NASDAQ:GOOGL), the parent company of Google, to $174 from the previous $154, while retaining a Buy rating on the stock. The adjustment reflects a positive outlook on the U.S. Internet sector, including the advertising market and e-commerce trends.
The firm's analyst noted that the advertising environment is showing signs of improvement and e-commerce is holding steady. Despite leaving the top-down advertising model unchanged, the expectation is that the current forecast may be conservative, with digital advertising growth projected at 8% year-over-year compared to third-party forecasts that are trending towards more than 10% year-over-year growth.
In terms of e-commerce, the firm has revised its forecast slightly upwards, now anticipating U.S. e-commerce growth of 9-10% over the next few years, an increase from the prior forecast of 8-9%. The analyst's top stock picks in the sector include Amazon (NASDAQ:AMZN), Meta Platforms (NASDAQ:META), and The Trade Desk (NASDAQ:TTD).
Specifically for Alphabet, the new price target of $174 is based on a 26 times multiple of the next twelve months' (NTM) GAAP EPS, a significant increase from the previous 16 times multiple. The firm expects Alphabet's shares to undergo a continued re-rating as investors grow more comfortable with the company's position in artificial intelligence (AI) and the potential long-term benefits from connected TV (CTV).
InvestingPro Insights
Alphabet Inc (NASDAQ:GOOGL) remains a standout in the Interactive Media & Services industry, with Stifel's recent price target upgrade underscoring the company's robust fundamentals and promising market trends.
In line with this optimistic view, InvestingPro data reveals a strong financial position for Alphabet, with a market capitalization of $1.93 trillion and a healthy P/E ratio of 26.81, which adjusts to a slightly lower 24.86 based on the last twelve months as of Q4 2023.
This valuation is supported by the company's solid revenue growth of 8.68% over the same period, indicating a thriving business despite the broader economic challenges.
Two notable InvestingPro Tips for Alphabet include its favorable liquidity position, holding more cash than debt, and its ability to trade at a low P/E ratio relative to near-term earnings growth, suggesting that the stock may be undervalued given its growth prospects.
These insights reflect Alphabet's financial stability and potential for investor value, aligning with Stifel's positive outlook on the company's future, particularly in areas like AI and CTV.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available that delve into Alphabet's financial health and market position. With the use of coupon code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription to access these valuable insights and stay ahead in the investment game.
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