Shares of Alphabet Inc. GOOGL hit a new 52-week high of $798.69 on Dec 29, 2015 eventually closing at $793.96.
The technology giant with a market cap of around $546.03 billion witnessed more than 49% share price rise over the past year. Average volume of shares traded over the last three months was around 2,075k. The company’s long-term projected earnings per share growth rate is 17%.
What’s Driving Alphabet Up?
The bullish stance of equity research firm, Axiom Capital, on Alphabet is a positive.
Axiom Capital analyst Victor Anthony raised the target price on Alphabet to $1,000 from $900 and reiterated a Buy rating. Also, the firm raised the 2016 revenue and EPS estimate for Alphabet to $87.64 billion and $35.19, respectively. Anthony also increased the 2017 revenue estimates to $102.85 billion and adjusted EPS to $44.12.
According to Anthony, Alphabet’s earnings will continue to gain from the consistent growth in YouTube and acceleration in paid search spending, driven by increased mobile click volumes.
Google’s YouTube is the world's leading online video sharing platform. The online video unit attracts more than a billion users every month, plays host to countless viral clips and creates sensations overnight. Google’s video wing’s progress, particularly TrueView ad, is also worth tracking. Lately, the company has been going for premium content to attract higher ad prices and possibly a streaming/subscription service.
These moves will help the online-video unit to attract more audience, in turn boosting advertising revenues and margins.
The firm is optimistic about the mobile messaging application, recently developed by Google, to compete with similar services offered by Facebook Inc. (FB). The new service will leverage Google's artificial intelligence know-how, involving chatbots. These are software programs within a messaging app that search the Internet to answer a question.
Moreover, the recent joint venture with Ford to build driverless vehicles is a big positive for Google. Through this partnership Google will gain expertise on mass production of automobiles, while Ford will be able to leverage the former’s real-world autonomous drive research.
Alphabet is one of the leading providers of target-based advertisements on the web. The company has shown good execution to-date maintaining its position in a competitive, fast-growing search market. Its traction in the search market is another positive, which, along with its focus on innovation, strategic acquisitions and Android OS, should generate strong cash flows.
Alphabet currently has a Zacks Rank #2 (Buy).
Stocks to Consider
Some favorably ranked technology stocks are Akamai Technologies, Inc. AKAM, MeetMe, Inc. MEET and Qunar Cayman Islands Limited QUNR. All the three stocks sport a Zacks Rank #1 (Strong Buy).
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