Google Stock: Has Alphabet’s (GOOGL) Growth Peaked?

Shares of Google-parent Alphabet Inc (NASDAQ:GOOGL) jumped more than 4 percent in early trade Friday, following the company’s upbeat second-quarter earnings report.

The Mountain View, California-based company posted EPS of $8.42 on $21.50 billion in revenue. Quarterly sales jumped more than 21% on a year over year basis, and 25% on a constant currency basis. Wall Street expected the search giant to report earnings per share of $8.04 on $20.77 billion in revenue.

Alphabet said its ad revenue increased 19 percent to $19.14 billion, with aggregate paid clicks growing 29 percent from the same period last year, while paid clicks on Google websites came in 37 percent higher year over year. The numbers suggested strong performance in Alphabet’s core areas of mobile search, programmatic advertising and YouTube engagement.

As a result of a strong quarter with revenue growth exceeding expectations by a large amount, a number of bullish analysts raised their price targets to keep up with the stock surge. Pacific Crest analyst Evan Wilson raised his price target on Google stock to $960 from $910 and recommended buying the name.

Jefferies’s Brian Pitz also raised his price target for Alphabet to $1,000 while reiterating a ‘Buy’ rating. The analyst said he continues to believe that online video is the biggest online ad growth driver and Alphabet’s YouTube is the premier vehicle to play that trend. Alongside Jefferies analyst, JPMorgan (NYSE:JPM) analyst Doug Anmuth also issued a research report on Alphabet stock. He raised his 12-month base case estimate on the name to $950 from $920, saying the company’s revenue growth accelerated in Q2. The analyst maintained an ‘Overweight’ rating on the stock.

Finally, Piper Jaffray’s Gene Munster raised his price target for GOOGL by 9 points to $930, noting that mobile continued to drive the biggest part of Alphabet’s revenue growth. The analyst kept an ‘Overweight’ rating on the issue.

It is to be noted, that not every single brokerage firm is totally positive on Alphabet shares. A new research report from Wedbush’s James Dix makes the case that mobile search monetization may be peaking. The technology analyst believes that Q2 added peak organic growth to Alphabet’s FY 2016, and that this dynamic could lead to some risk in the second half of FY2016. According to Dix, who reaffirms his ‘Neutral’ rating on the search giant’s shares, this change may put investors in search for the next catalyst.

Alphabet Stock Action

Alphabet’s shares currently print a one year return of about 19%, and a year-to-date return of around 2%.

Although the name trades in the green, its current standing represents a notable improvement from its June 27, $681 level. Google stock saw a big move last session, as the equity gained more than 25 points, or 3.33 percent, on the day. The move came on very strong volume too with the issue printing a session total of 5.1 million shares, well ahead of its three month daily average of 1.7 million shares.

Alphabet’s stock, which has been trading at a volatile range of $690 – $748 in the past three-month time frame, has showed a sharp gain since late June. The stock did see a breakout on Friday, reaching an intra-day high of $803.94 a share. Some digestion above Friday’s close of $791.34 could set the name up for another move higher towards the $795 level. That said, for momentum traders it’s prudent to take some profits off the table after a big move. Trim and trail.

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