The advertising sector has faced numerous difficulties in the past year due to the economic crisis, and recent Q4 reports from Alphabet, Meta Platforms, and Snap suggest that they are still facing challenges. Despite the uncertainty, many advertisers remain hopeful that their budgets will eventually increase as the economy improves. Alphabet reported a slight decrease in their quarterly ad revenue, while Snap predicts a 10% drop in current-quarter revenue due to competition for ad dollars. Meta Platforms reported its third consecutive quarter of YoY revenue decline and plans to reduce costs and repurchase shares. Despite these ongoing challenges, advertisers seem to be more optimistic about the U.S. market compared to Europe or China, though there is still a great deal of uncertainty in the near future.
Alphabet Inc Class A Stock Analysis:
An average target price of USD 129.11 over the next 12 months is predicted by 31 analysts for Alphabet (NSD:GOOGL) Class A stock. The average analyst rating for the stock is “Strong Buy.” Stock Target Advisor’s evaluation of Alphabet Inc Class A is “Slightly Bullish,” based on 9 positive signals and 4 negative signals. The stock’s last closing price was USD 107.74. Over the past week, the stock price increased by +12.52%, over the past month it rose by +19.51%, and over the past year it decreased by -24.70%.
Meta Platforms Inc. Stock Analysis:
The average target price for Meta Platforms (NSD:META) set by 64 analysts is USD 177.09 in the next 12 months. The consensus among analysts is a “Strong Buy” rating. Stock Target Advisor’s own analysis of Meta Platforms Inc. is “Bullish” based on 10 positive signals and 4 negative signals. The last closing price of Meta Platforms Inc.’s stock was USD 188.77. The stock price has seen a significant increase over the past week (+47.27%), month (+68.43%), and year (+1,433.47%).
Snap Inc Stock Analysis:
An analysis of 36 analyst forecasts for Snap (NYE:SNAP) shows an average target price of USD 11.57 in the next year. The average analyst rating for Snap Inc is Hold. According to Stock Target Advisor, the overall outlook for Snap Inc is slightly bearish, based on a combination of 4 positive signals and 5 negative signals. The current stock price for Snap Inc is USD 11.40. In the past week, Snap Inc’s stock has increased by 1.73%, by 2.45% in the past month, and decreased by 53.47% in the last year.
What we like:
High market capitalization
This is one of the largest entities in its sector and is among the top quartile. Such companies tend to be more stable.
Superior risk adjusted returns
This stock market has performed well, on a risk adjusted basis, compared to its sector peers(for a hold period of at least 12 months) and is in the top quartile.
Positive cash flow
The company had positive total cash flow in the most recent four quarters.
Superior Revenue Growth
This stock has shown top quartile revenue growth in the previous 5 years compared to its sector.
What we don’t like:
High volatility
The total returns for this company are volatile and above median for its sector over the past 5 years. Make sure you have the risk tolerance for investing in such stock.
Overpriced compared to book value
The stock is trading high compared to its peers median on a price to book value basis.
Overpriced on cashflow basis
The stock is trading high compared to its peers on a price to cash flow basis. It is priced above the median for its sectors. Proceed with caution if you are considering to buy.
Highly leveraged
The company is in the bottom half compared to its sector peers on debt to equity and is highly leveraged. However, do check the news and look at its sector and management statements. Sometimes this is high because the company is trying to grow aggressively.
Negative free cash flow
The company had negative total free cash flow in the most recent four quarters.
