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US Nasdaq earnings and price forecasts: Alphabet Q3 2022 results preview


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Alphabet Inc. Q3 results expected to show rise in revenue but softer earnings year on year.

BG_FAANG_facebook_amazon_apple_netflix_aSource: Bloomberg
 
 Shaun Murison | Senior Market Analyst, Johannesburg | Publication date: Monday 17 October 2022 

When are the Alphabet (Google) results expected?

Alphabet (NASDAQ: GOOG, GOOGL) is set to release fiscal third quarter 2022 financial results on Tuesday, October 25 at 10pm (BST).

What is ‘The Street’s’ expectations for the Q3 2022 results?

‘The Street’ expectations for the upcoming results are as follows:

  • Revenue of $70.875bn (-0.10% year on year)

  • Earnings per share (EPS) $1.27 (8.84% year on year)

While Alphabet is expected to deliver year on year revenue growth, earnings are expected to be negatively impacted from the group’s digital advertising operations. The advertising market has been under some pressure globally when we look at soft forecasts for social media platforms such as Meta (Facebook) and Snap Inc. (Snapchat). The rise of TikTok has also provided some stiff competition for the likes of YouTube in recent times.

Revenue is however expected to be supported by Alphabet’s cloud services which has been a key growth driver for the business, with its market share in the category now around 10%.

How to trade Alphabet into the results

Since July this year we have seen outperform, overweight, and buy ratings on Alphabet maintained from the likes of Deutsche Bank, Oppenheimer and Citigroup (to name but a few). We have seen no downgrades to ratings on the stock over this period.

101722_Refinitiv_Alphabet.pngSource: Refinitiv

Refinitiv data shows a consensus of (48) analyst ratings at ‘buy’ for Alphabet Inc. A mean of estimates suggests a long-term share price target of $141.33 for the company. The current share price trades at a 48% discount to this assumed long term fair value (as of the 17th of October 2022).

101722_Client_Sentiment.pngSource: IG

IG sentiment data shows that 95% of clients with open positions on the share (as of the 17th of October 2022) expect the price to rise over the near term, while 5% of these clients expect the price to fall.

Alphabet Inc (A Shares) – Technical view

101722_AlphabetInc.pngSource: IG Pro RealTime

The long-term price trend for the share price of Alphabet Inc. remains down, although in the near term we see the price has moved into a consolidation between levels 94.00 (support) and 103.60 (resistance).

Traders looking to find short entry in line with the longer-term downtrend might look for either a bearish reversal off the 103.60 resistance level or a downside break of the 94.00 support level.

Traders preferring to look for long entry might instead hope to see a break of resistance at 103.60. In this scenario it would suggest a double bottom reversal pattern and possible start of a new short to medium term uptrend.

In summary:

  • Alphabet Inc. is set to release fiscal third quarter 2022 financial results on Tuesday, October 25 at 10pm (BST)

  • Revenue of $70.875bn (-0.10% year on year) is expected for Q3 2022

  • Earnings per share $1.27 (8.84% year on year) is expected for Q3 2022

  • A consensus of analyst ratings suggests the company to still be a ‘buy’ at current levels

  • Most IG clients with open positions on the stock expect the price to rise in the near term

  • The long-term price trend for Alphabet Inc. remains down

  • The short-term price action suggests a rangebound environment

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