Alphabet Stock Price Forecast March 2022 – Time to Buy GOOG Stock?
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
With a gain of 65%, Alphabet (GOOG) was the best performing FAANG stock of 2021. The FAANG pack, which has led the markets for the last many years looked weak in 2021 amid concerns over slowing growth and increasing regulatory scrutiny. However, GOOG managed to overcome the pessimism amid the steep rise in its revenues from 2020 lows.
Looking at the 2022 price action, GOOG stock is down 1.6% in the year. Amazon is up 1.6% while Apple stock has gained around 1%. Netflix is the worst-performing FAANG stock of the year followed by Facebook parent Meta Platforms. Both these stocks are trading with double-digit losses in 2022 and are underperforming the markets by a wide margin.
FAANG stocks
The divergence in FAANG stocks’ 2022 price action has been primarily due to the markets’ reaction to their earnings. Amazon stock had soared after its earnings, as did Apple and Alphabet as markets gave a thumbs up to their fourth-quarter earnings. However, Netflix and Meta Platforms had tumbled after their respective earnings release. While Netflix provided a dismal outlook for subscribers, Meta Platforms reported the first-ever fall in users since going public. If that wasn’t bad enough, it said that Apple iPhone privacy rules would shave off almost $10 billion from its 2022 revenues.
68% of all retail investor accounts lose money when trading CFDs with this provider.
Alphabet reported stellar earnings
Alphabet reported revenues of $75.33 billion in the fourth quarter, a YoY increase of 32%. Its sales were also ahead of the $72.17 billion that analysts were expecting. Google advertising, which is the company’s largest segment generated revenues of $61.24 billion in the quarter, a YoY rise of 33%. Alphabet’s advertising business benefited from the increase in digital advertising as well as better ad rates during the year. Amazon also posted strong growth in its ad revenues. However, companies like Meta Platforms and Twitter spooked markets with commentary on their ad business.
Alphabet reported an EPS of $30.69 in the fourth quarter which was higher than the $27.34 that analysts were expecting. Sundar Pichai, Alphabet’s CEO said in the earnings release that “Q4 saw ongoing strong growth in our advertising business, which helped millions of businesses thrive and find new customers, a quarterly sales record for our Pixel phones despite supply constraints, and our Cloud business continuing to grow strongly.”
GOOG also announced a stock split
GOOG also announced a 20-for-one stock split. Amazon also later announced a 20-for-1 stock split which would be its first split since 1999. Tesla, which had split its stock in 2020 only is also considering another split. While stock splits don’t add fundamental value, they help drive up the liquidity, and split announcement invariably leads to an upwards price action in the stock.
Alphabet stock to spin-off quantum technology company
Alphabet has announced that it would spin off Sandbox, its quantum technology group, into a new company, and Jack Hidary, its serving CEO would continue in that position. Earlier this month, the company also announced that it would acquire cyber defense firm Mandiant for $5.4 billion.
“Organizations around the world are facing unprecedented cybersecurity challenges as the sophistication and severity of attacks that were previously used to target major governments are now being used to target companies in every industry,” said Thomas Kurian, CEO, of Google Cloud. He added, “We look forward to welcoming Mandiant to Google Cloud to further enhance our security operations suite and advisory services, and help customers address their most important security challenges.”
Alphabet stock price forecast
Most Wall Street analysts are bullish on GOOG stock and 47 out of the 48 analysts polled by CNN Business rate it as a buy or some equivalent. One analyst rates GOOG as a hold while none have a sell rating. Its median target price of $3,500 is a premium of 22.1% over current prices. Alphabet’s street high target price of $3,900 implies an upside of almost 36% while the street low target price of $3,150 is a premium of 9.9%.
Alphabet stock long term forecast
Like other Big Tech companies, Alphabet is also facing global scrutiny over its alleged ant-trust behavior. There is also a global pushback against tech giants and many countries are looking to impose a digital tax.
That said, the long-term forecast for GOOG stock looks positive looking at the digital transformation. Over the medium to long term, higher monetization on the YouTube platform would help the company increase its topline as well as bottomline. Alphabet is also betting aggressively on the cloud and revenues increased significantly in the second quarter. Overall, Alphabet has a monopolistic lead in the search market and a sound leadership position in the smartphone operating system.
Wall Street analysts have been raising GOOG’s target price
Wall Street analysts have been gradually raising Alphabet’s target price over the last six months. Yesterday, Morgan Stanley reiterated the stock as a top pick and said, “Upside: Still an Innovation Driven Cash Flow Story: We continue to believe GOOGL’s innovation focus across its platform can drive outsized ad revenue and FCF growth.”
After the company’s fourth-quarter earnings release, several analysts had raised GOOG’s target price, with UBS’ Lloyd Walmsley raising his target price to a street high of $3,900. “Strong core search ad revenue growth, a 20:1 stock split, substantial growth in the cloud backlog, and copacetic commentary around the outlook were more than enough to offset another weak quarter for YouTube revenue growth, slightly weaker Google Service margins … and higher cloud segment losses,” said Walmsley in his note.
Analysts are bullish on GOOG stock
JPMorgan analyst Doug Anmuth raised his target to $3,450 from $3,250. “Despite broader macro uncertainties, Alphabet delivered strong 4Q results … and management remains confident in the business, albeit without providing a detailed forward outlook … We also believe that GOOGL’s ongoing investments in AI & innovation continue to improve the overall search experience and drive higher growth,” said Anmuth in his note.
Should you buy Alphabet stock?
Alphabet is among the best stocks to play the digital transformation. The stock now trades at an NTM (next-12 months) PE multiple of 24.6x. The multiples have come off their 2021 highs and look quite attractive now.
Buy GOOG Stock at eToro from just $50 Now!
