Stifel Nicolaus analyst Scott Devitt weighed in today with a few insights on two internet giants: Alphabet Inc (NASDAQ:GOOGL) and Expedia Inc (NASDAQ:EXPE). The analyst reflects on successful earnings reports from Alphabe and Expedia.
Before we start, as usual, we like to include the analyst’s trackrecord when reporting on new analyst notes. According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Scott Devitt has a yearly average return of 19% and a 74% success rate. Devitt is ranked #77 out of 4571 analysts.
Alphabet Posts Solid Revenue and Profit Growth
Alphabet investors have a smile on their faces today after the web giant reported solid first-quarter results, which featured sustained momentum across products and broad-based global growth. Alphabet’s net revenue of $20.1 billion came in ahead of consensus of $19.8 billion, while total gross revenue grew to $24.8 billion and topped the Street’s $24.2 billion forecast.
In reaction, Devitt raised his price target for Alphabet shares to $1,075 (from $1,050), while reiterating a Buy rating on the stock.
Devitt commented, “Alphabet continues to deliver impressive results, comfortably topping Street forecasts for 1Q:17 on the top- and bottom-lines. Despite approaching a $100B revenue run-rate, the company shows no signs of slowing down and the Alphabet’s advertising profits are funding a number of compelling short, medium, and longer-term investments that could develop into multi-billion dollar businesses themselves someday. Despite plowing billions into these investments each quarter, the company continues to spit off cash and trades at just 11x 2018 EV / EBITDA.”
“Alphabet’s core advertising businesses continue to perform and investors have a lot of reasons to be optimistic about the company’s future,” the analyst added.
Out of the 22 analysts polled by TipRanks (in the past 3 months), 17 rate Alphabet stock a Buy, 4 rate the stock a Hold, and only one recommends to Sell. With a return potential of 10%, the stock’s consensus target price stands at $983.33.
Expedia Stock Downgraded to Hold on Breach of Target Price
Expedia reported a good first-quarter driven by momentum at Core OTA and solid performance from trivago, Egencia and HomeAway. The travel giant reported bookings of $20.9 billion (ex-HomeAway), compared to the Street estimates of $20.77 billion and EBITDA of $208 million, beating the Street at $180 million.
As shares of Expedia reached Devitt’s price target of $133 and currently settled into a fair zone, the analyst downgrades the stock from Buy to Hold, while slightly lifting the target to $135.
The analyst noted, “Since the beginning of the year, shares of Expedia have appreciated ~20% (vs. the S&P up ~7%) and have surpassed our target price of $133. We believe shares currently reflect expectations for improvements in the back half of this year and into next and present a more balanced risk/reward scenario.”
Out of the 16 analysts polled by TipRanks (in the past 3 months), 12 are bullish on Expedia stock a Buy, while 4 remain sidelined. With a return potential of 11%, the stock’s consensus target price stands at $148.33.