Alphabet Inc. (NASDAQ:GOOGL) shareholders are probably feeling a little disappointed, since its shares fell 5.9% to US$167 in the week after its latest second-quarter results. Alphabet reported US$85b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$1.89 beat expectations, being 2.3% higher than what the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
View our latest analysis for Alphabet
After the latest results, the 49 analysts covering Alphabet are now predicting revenues of US$345.7b in 2024. If met, this would reflect an okay 5.3% improvement in revenue compared to the last 12 months. Per-share earnings are expected to increase 7.2% to US$7.63. In the lead-up to this report, the analysts had been modelling revenues of US$347.0b and earnings per share (EPS) of US$7.57 in 2024. So it’s pretty clear that, although the analysts have updated their estimates, there’s been no major change in expectations for the business following the latest results.
The analysts reconfirmed their price target of US$204, showing that the business is executing well and in line with expectations. The consensus price target is just an average of individual analyst targets, so – it could be handy to see how wide the range of underlying estimates is. The most optimistic Alphabet analyst has a price target of US$230 per share, while the most pessimistic values it at US$151. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Alphabet’s past performance and to peers in the same industry. We would highlight that Alphabet’s revenue growth is expected to slow, with the forecast 11% annualised growth rate until the end of 2024 being well below the historical 16% p.a. growth over the last five years. Compare this to the 123 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 10% per year. Factoring in the forecast slowdown in growth, it looks like Alphabet is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most obvious conclusion is that there’s been no major change in the business’ prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$204, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Alphabet going out to 2026, and you can see them free on our platform here..
We also provide an overview of the Alphabet Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com