- Mizuho Analyst James Lee reiterates a buy recommendation alphabet inc GOOD Google Google and a Price target of $135.00.
- Mizuho’s most recent agency reviews showed that advertising remained a challenge due to increased inflation and tightening consumer budgets.
- For the remainder of FY23, he expects advertisers to optimize their ad spend and focus on targeting existing customers who offer higher LTV. Lifetime Value or LTV is an estimate of the average revenue that a customer will generate over their lifetime as a customer.
- However, consensus ad revenue growth of 3.4% year over year appears reasonable, the analyst says in a note on Friday titled “Ad revenue controls mixed, but more cost cuts on the horizon; keep buying.“
- Mizuho’s recent industry call with a leading SEO firm suggested that generative AI would have limited impact on search engine market share given Google’s limited commercial use cases and significant infrastructure advantage over its competitors.
- Lee estimates that Alphabet could reduce its cost base by $7.5 billion, or 2.2% of revenue, in FY24 through the combination of renewable energy consolidation, workforce reductions and operational cost optimization, up 8% from consensus -Could generate operating income in FY24.
- He sees limited downside of fiscal 23 revenue growth and cost optimization efforts on the horizon, and likes the lineup in the quarter.
- Price promotion: GOOG shares traded 0.27% lower at $105.61 on the last check Friday.
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