Summary
- I am changing my previous Hold rating to Buy, as the company appears to be undervalued in light of the cost optimization measures announced by management.
- The layoffs were a necessary decision, and their impact should support the company’s margins in the foreseeable future, which will be very difficult for the economy as a whole.
- Taking all the discussed factors into account, Google stock turned out undervalued by 16.26% according to my DCF valuation model.
- Perhaps the recent breakout from the descending price channel on increased volumes and the intersection with the 200-week line SMA has already set a new trend that will continue.
- GOOGL is a Buy with a price target of $115 per share by the end of 2023.
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Intro & Thesis
About 2 months ago I published an article on Google (NASDAQ:GOOGL) exposing the misleading information that insiders were actively buying stock. At the time, I advised against buying Google stock and spoke of the high downside risks to EPS forecasts shortly. History has proven me right – EPS and revenue have actually declined slightly in recent months, according to Seeking Alpha data.
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