Google and Facebook parents see price target cut ahead of Q3 earnings: Key factors this analyst is watching – Alphabet (NASDAQ:GOOGL), Meta Platforms (NASDAQ:META)

As Meta Platforms Inc. META and Alphabet Inc. GOOGL GOOG are preparing to publish their third quarter resultsanalyst at KeyBanc Capital Markets noted his estimates — both for the current year and forward — as well as stock price targets.

What happened: Justin Patterson maintained its overweight ratings for both Meta and Alphabet stocks. He cut Meta’s target price from $196 to $175 and Alphabet’s target price from $125 to $120.

See also: Why Big Tech Earnings, October CPI Print Could Be Near-Term Market Drivers: Gene Munster on These 2 Catalysts

4 things KeyBanc looks at: In both earnings prints, the analyst said he would be watching macro and vertical health, ICT Tac rivalry, regulatory landscape and capital allocation and spending discipline.

From a regulatory point of view, Next adoption by Europe of the “Digital Markets Act” suggests increased operating costs for these businesses in 2023 and beyond, Patterson said.

Alphabet is facing a slowdown in its main products: Citing slowdowns in Alphabet’s core products, Patterson cut third-quarter revenue and earnings per share estimates by 1% and 3%, respectively, to $57.2 billion and $1.15. . The analyst expects a six-point deceleration for Look for and fixed income for Youtube year over year due to macro and forex headwinds. Patterson also lowered his estimates for 2023 and 2024, citing a softer market in advertising and enterprise computing.

Forex to hurt Meta: KeyBanc lowered Meta’s revenue estimate by 2% to $27.8 billion, reflecting ongoing forex headwinds. The firm also cut its 2023 and 2024 estimates for the social media giant.

Meta better positioned in the long term: Patterson said he sees more upside potential for Meta over the long term, given the subdued sentiment towards investments in the Metaverse.

“While we expect flat EPS growth at LSD at both companies, we believe progress in cost containment initiatives could reassure investors that double-digit revenue growth and growth of teenage EPS to 20%+ are achievable in a 2024 recovery,” Patterson said.

Price action: Meta closed Monday’s session down 0.22% at $129.72 and Alphabet ended at $102.52, up 1.37%, according to Benzinga Pro data.

Read more : How to Invest in the Metaverse

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