Alphabet Inc , shares fell right after the market opened in New York on Friday morning despite a glowing report on the firm’s prospects from Credit Suisse. The Swiss bank said that it reckons shares in the tech conglomerate are worth $815, ahead of its previous price target at $750.
At time of writing shares in Alphabet Inc , known for the Google business it now owns, were selling for $535.73, down 0.54 percent for the morning so far. The stock appears to be reacting to a shaky market rather than trading based on the Credit Suisse report. The Nasdaq was also down in choppy early trading on Friday.
Looking forward to Alphabet
Stephen Ju, who wrote the report for Credit Suiss, is especially bullish on YouTube. He doesn’t see much danger from Facebook’s video offering in the short term and reckons that YouTube, combined with the Google Play store, will make up a much larger part of the firm’s revenue going forward.
Credit Suisse isn’t the only Wall Street house that says Alphabet is looking strong. In a recent report Robert W. Baird said that Alphabet could be the next General Electric, the kind of structurally important business that the world just can’t do without.
Google was, before it was subsumed by Alphabet , a much bigger firm than General Electric in terms of market capitalization, but search is a risky business. It’s foreseeable that something, most notably tech from Facebook or another web-savvy firm, could end its importance.
Colin Sebastian, who authored the report for Baird, said that there’ more to GE than market cap. He reckons that in terms of strategy and tactics, Google looks like the massive industrial. “With a number of long-term but large-scale investment in large growth markets, Google, in our view, is using software and engineering as a core competency to disrupt new markets, and as a result, may turn out to be the GE of the new technology generation,” he wrote.
Part, or most, of the reason that GE’s market cap is so much lower than Google’s is the fact that the firm has paid out dividends for decades. That’s not something that Google seems willing to do just yet.
Alphabet earnings are on the way
Alphabet Inc will release its first earnings numbers under its new structure on October 22, according to a press release on Google’s site on Wednesday. The report will be more notable as an example of how the firm will report its numbers from now on, under the auspices of CFO Ruth Porat.
Wall Street is looking for Alphabet to show earnings of $7.20 per share for the quarter, which it records as its third of fiscal 2015. The firm will report sales of $18.53B in the period according to the consensus forecast on Wall Street.
Most analysts are very positive on the future of Alphabet as it enter this, a firmly new phase in its history. Of the 49 following the firm 21 rate it at Buy, and 25 rate the stock at Outperform. Just three Wall Street voices are telling clients to Hold the stock, while there are no major negative calls out there.
That looks good for Alphabet heading into the release of the firm’s report in the coming weeks, but there are major risks ahead in the way Ruth Porat, Larry Page, and Sergey Brin handle the big change.