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KeyBanc ups Alphabet shares target after Q1 beat

EditorEmilio Ghigini
Published 04/26/2024, 08:24 AM
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On Friday, Alphabet Inc. (NASDAQ:GOOGL) shares witnessed an increase in its price target, set by KeyBanc, to $200 from the previous $175, while the firm sustained an Overweight rating on the stock.

This adjustment follows Alphabet's reported robust first quarter performance, which included an acceleration in Search growth and a significant earnings per share (EPS) upside, coupled with the initiation of a dividend.

Alphabet's recent financial disclosure revealed a solid first-quarter performance that surpassed expectations. KeyBanc's analysis highlighted the company's Search growth acceleration and the introduction of a dividend as key positive developments. The firm also noted that Alphabet's non-Search businesses are scaling effectively, and management is demonstrating a heightened commitment to profitability.

KeyBanc's analyst expressed increased confidence in Alphabet's financial outlook, anticipating a greater than 20% compound annual growth rate (CAGR) in EPS through the estimated year 2025. This optimistic projection is based on the company's strong quarterly results and the strategic moves made by its management.

The revised price target of $200 is founded on a 22.7 times multiple of Alphabet's projected 2025 earnings per share (P/E). The Overweight rating indicates that KeyBanc expects the stock to outperform the average return of the stocks the firm covers over the next 12 to 18 months.

InvestingPro Insights

Alphabet Inc. (NASDAQ:GOOGL) has been a topic of discussion after its price target increase and the initiation of a dividend. To further understand the company's financial health and market position, let's consider some real-time data and InvestingPro Tips. Alphabet is currently trading at a P/E ratio of 26.99, which adjusts to 22.56 when looking at the last twelve months as of Q1 2024, indicating that the stock may be trading at a low P/E ratio relative to near-term earnings growth. Additionally, the company holds a robust market capitalization of $1940.0B, reflecting its significant presence in the market.

InvestingPro Tips highlight that Alphabet not only holds more cash than debt on its balance sheet but also generates cash flows that can sufficiently cover interest payments. Moreover, the company's liquid assets exceed its short-term obligations, suggesting financial stability and resilience. With a revenue growth of 11.78% over the last twelve months as of Q1 2024, Alphabet continues to scale effectively, a point that aligns with KeyBanc's analysis.

For investors interested in deeper insights, there are an additional 14 InvestingPro Tips available for Alphabet, which can be accessed through the InvestingPro platform. These tips provide a comprehensive analysis of the company's financials and market performance. To gain access to these valuable insights, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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