With Google stock trading some 13% below its all-time high heading into Monday’s fourth-quarter earnings report, the timing could be right for parent Alphabet (GOOGL) to increase its share buyback program. Google stock is trading well below a standard buy point, but there’s also a more aggressive play if shares pop on earnings.
“We believe Google could soon announce a sharply higher stock buyback authorization of $12 billion to $15 billion — up from $8.6 billion (authorized) in January 2018,” Jefferies analyst Brent Thill said in a recent report to clients.
Analysts at Canaccord Genuity and Susquehanna Financial Group also are among analysts that say Google’s share buyback plans bear watching when it reports fourth-quarter earnings after the market close on Monday.
“We remain positive on the secular ad growth story driven by mobile search and YouTube combined with generally better expense management and a more shareholder-friendly capital allocation approach,” Susquehanna analyst Shyam Patil said in his note to clients.
Google had $106 billion in cash as of Sept. 30. There’s speculation Google could acquire a big software company to boost its cloud-computing business. A large software deal could eat up a lot of cash.
After a brutal sell-off in technology companies in December, Google stock has gained 7% in 2019. That performance trails the other so-called FANG stocks. Amazon.com (AMZN) is up more than 8%. Facebook‘s (FB) gain exceeds 26%. Netflix (NFLX) has jumped 27% thus far.
Possible Double Bottom?
Alphabet stock has a standard entry point of 1,291.54. However, Google’s chart pattern also could be viewed as forming a very long double bottom. In that case, there would be a more aggressive buy point of 1,135.10.
Alphabet earnings are expected to rise 12% to $10.86 per share, with gross revenue up 20.6% to $38.98 billion.
Aside from the outlook for Google’s core search-driven advertising business, analysts may seek an update on its cloud-computing strategy. Google in January brought in a new leader for its cloud-computing unit, which has struggled in the corporate market.
Google stock climbed 1.4% to 1,134.08 in midday trading on the stock market today.
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