GOOGL Stock: Analysts Bullish Despite Recent Gains
Alphabet Inc. (GOOG, GOOGL) stock has been a favorite among sell-side analysts, with the majority still recommending it as a buy. This sentiment can be attributed to the company’s strong free cash flow (FCF) potential, which may drive the stock’s value to surpass $220 per share by the end of the year.
As of January 12th, GOOGL stock closed at $142.65. This implies a potential upside of over 55% based on a target price of $221.11. Analysts, although not as optimistic as this projection, still view GOOGL stock favorably. Refinitiv’s survey of 45 analysts reveals an average price target of $153.66, representing a 7.7% increase from the current price. Additionally, AnaChart.com reports that out of 207 stock price recommendations, 95% still recommend buying GOOGL stock, with an average price target of $165.06, presenting a potential 15.7% upside.
Growth at a Reasonable Valuation: A Case for GOOGL Stock
GOOGL stock falls into the category of a “Growth at a Reasonable Valuation” (GARP) stock. Analysts are anticipating an 11% growth in revenue for the company this year compared to 2023. This is based on a survey conducted by Seeking Alpha, reflecting a projected revenue of $340.1 billion for 2024 as opposed to the estimated $305.73 billion for 2023.
Furthermore, the forecasted earnings per share (EPS) is expected to be 16% higher at $6.66 in 2024, compared to the average prediction of $5.74 for 2023. With these figures, GOOGL stock is valued at a relatively inexpensive 21.4 times forward earnings. In comparison, its peer, Microsoft (MSFT), is trading at a higher 34x forward multiple. Morningstar’s average forward P/E multiple for GOOGL stock stands at 25.19x.
Considering this comparative and historical valuation, GOOGL stock appears attractively priced.
Free Cash Flow Potential: Driving GOOGL Stock Higher
In a previous article, we highlighted Alphabet’s potential to generate $111 billion in free cash flow (FCF) this year. This projection is based on a 32.7% FCF margin for the anticipated $340 billion revenue in 2024. If this FCF is valued at a multiple of 25x, it could push GOOGL stock’s market cap to $2,775 billion, resulting in a 55% increase over the current market cap of $1,790 billion.
Therefore, GOOGL stock has the potential to reach a value of $221.11 per share, which is 1.55 times its current price of $142.65. Despite the recent rise in the stock, investors have reason to be optimistic about its future prospects given this valuation. The upcoming earnings report on January 30th could serve as a catalyst for further gains if it reveals a robust free cash flow margin, similar to the previous quarter.
Why GOOGL Stock Could Reach $220 Per Share
Considering the bullish sentiment among analysts, the favorable growth prospects, and the potential for substantial free cash flow, GOOGL stock could realistically reach a value of over $220 per share. With most analyst recommendations still leaning towards a buy, it is clear that the market sees value in Alphabet’s stock.
Investors should keep an eye on the upcoming earnings report as it could provide further validation for the stock’s growth potential. If Alphabet continues to demonstrate a powerful free cash flow margin, it could generate further momentum for GOOGL stock and push it to new heights.
GOOGL Earnings Report: Potential Catalyst for Higher Stock Price
Alphabet’s earnings report, scheduled for release on January 30th, presents an opportunity for further insights into the company’s financial performance. If the report indicates a strong free cash flow margin, as seen in previous quarters, investors can expect a positive impact on GOOGL stock’s price.
Considering the aforementioned potential for substantial free cash flow and the bullish sentiment among analysts, investors have a lot to look forward to in terms of the stock’s performance. While recent gains might imply a certain level of risk, the overall outlook for GOOGL stock remains promising.
Analyst comment
Positive news: Analysts are bullish on GOOGL stock and expect its value to surpass $220 per share by the end of the year. The stock is seen as attractively priced with potential for growth and a strong free cash flow potential. The upcoming earnings report could serve as a catalyst for further gains.
Market Outlook: With the positive sentiment among analysts and prospects for growth and free cash flow, GOOGL stock is expected to continue to rise, potentially reaching a value of over $220 per share. The upcoming earnings report will provide further validation and could drive the stock to new heights.
