Alphabet Inc (NASDAQ:GOOG) has generated substantial growth for shareholders, as its share price soared 66% in the last three years. After hitting an all-time high of $988 a share last month, traders were expecting Google stock to hit $1000 mark. However, its stock declined amid the downturn in internet stocks in the last couple of weeks.
I expect its stock to breach the $1000 mark in the short-term, amid the company’s upcoming financial numbers and lower valuations compared to the industry average.
Despite a massive share price rally in the past twelve months, its stock is trading at lower valuations than the industry average, suggesting solid support from financial numbers. In the latest quarter, the company generated revenue growth of 24% Y/Y and operating income increased 23% to $6.57B over the same period last year.
The company expects to extend the momentum in the following quarters, thanks to strong growth in Ad revenues. Google is likely to generate high double-digit revenue and earnings growth for the second quarter in the next few days, which could offer an immediate support to its share price.
The company’s recent investments in areas including Play, hardware, and Cloud, are generating solid returns for the company. Google continues to generate sizable growth from its Cloud businesses, as the cloud platform is among the fastest-growing businesses across Alphabet. The company’s potential to generate more than $7 billion in free cash flows is also strengthening its position to invest in growth opportunities.
Major analysts also expect strong momentum in Alphabet shares considering their price targets. FBN Securities has a price target of $1,025 with an “outperform” rating, signifying an upside from the current price of $960 a share. Overall, trading around 32 times to earnings compared to the industry average of 36 times, Google stock offers a buying opportunity ahead of the second quarter earnings release.
The author does not own shares of GOOG.