Alphabet (GOOGL) an Analyst Favorite Ahead of Q4 Earnings

The earnings calendar is jam-packed for a second straight week, with more than 20% of S&P 500 companies set to report. Among them is Google parent Alphabet (GOOGL, $2,630.45), which will unveil its fourth-quarter earnings report after Tuesday's close.

Similar to other mega-cap stocks, GOOGL has had a rough start to 2022, down around 10% for the year-to-date. Still, Alphabet remains a long-term outperformer on the charts, with shares up about 43% over the past 12 months.

Analysts see even bigger long-term gains for GOOGL stock too. The average price target among those following Alphabet that are tracked by S&P Global Market Intelligence is $3,365.86, representing implied upside of almost 28% over the next 12 months or so.

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Plus, of the 47 analysts following GOOGL, 31 say it's a Strong Buy and 15 call it a Buy. This compares to just one who has a Hold rating on the stock, with not a single Sell or Strong Sell to be found.

Truist Securities analyst Youssef Squali is one of those with a Buy rating on Alphabet. "GOOGL remains one of our favorite names going into the fourth-quarter earnings season as we believe it will show sustained signs of recovery especially in Search and YouTube, on the back of slightly easier year-over-year comps," he says.

The analyst is targeting top-line growth of 25% over Q4 2020, and expects to see broad-based improvement across all digital marketing channels following another strong holiday season.

UBS analyst Lloyd Walmsley is also expecting strong Q4 results from GOOGL. Walmsley points to the research firm's fourth-quarter ad checks, which suggest Google was a prime beneficiary of the reallocation of social media budgets.

"Google Search and YouTube sounded the best out of all the ad platforms in our checks, with a number of advertisers indicating that they are seeing demand for the platforms and improvements being made across both," he writes.

The analyst has a Buy rating on GOOGL ahead of earnings. He believes it's the "safest name to own [among online ad companies] into earnings season," but warns that it's also a crowded play.

As for Alphabet's upcoming report, analysts, on average, are looking for a 26.8% year-over-year (YoY) spike in revenues to fuel a 22.5% jump in earnings per share (EPS) to $27.32.

PayPal Stock Struggles Ahead of Earnings

PayPal (PYPL, $160.84) will report its fourth-quarter earnings after Feb. 1 close. Shares are trading at their lowest level since June following the recent stock market crash.

Oppenheimer analyst Dominick Gabriele thinks any additional weakness in the payments processor could create a buying opportunity. "[I]n a big market selloff or further correction below the current ~$160 stock price level, we would slowly build a position throughout the first half of 2022," he says. The analyst has an Outperform rating on PYPL, which is the equivalent of a Buy.

And there are certainly near-term risks to PayPal. "We see a combination of slowdown in e-commerce/penetration of e-commerce to total retail sales, worries of lower-multiple super app business revenue contribution, and a headwind of eBay for reasons of recent underperformance," Gabriele writes.

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Many of these same concerns were voiced by PYPL when it offered up lower-than-expected Q4 guidance back in November. Specifically, John Rainer, chief financial officer of PayPal, pointed to headwinds from eBay's payments migrations, as well as "retail supply chain and labor market concerns" as reasons why the company took a cautious stance for the three-month period.

PayPal forecast fourth-quarter earnings of $1.12 per share on a revenue range of $6.85 billion to $6.95 billion. This is roughly in line with analysts' consensus estimates for earnings of $1.12 per share (+3.7% YoY) on revenue of $6.86 billion (+12.2% YoY).

Analyst: Ford Motor Well-Positioned to Navigate "Chip and Ship" Issues

Ford Motor (F, $19.28) will report its fourth-quarter earnings after Thursday's close. Analysts, on average, expect earnings to surge 32.4% YoY to 45 cents per share. Revenues are projected to rise to $35.5 billion, a more modest 6.9% improvement over the year-ago figure.

Analysts will also be looking for updates to any "chip and ship" issues for the automaker. "We do see the chip issue continuing to run through 2022," said John Lawler, Ford's chief financial officer, in the company's third-quarter earnings call.

As for the "ship" part of the equation, "[P]erhaps our biggest job, in my opinion, is to break the constraints we have in manufacturing and our supply chain so we can get these products out to these customers," CEO Jim Farley said in that same call.

Still, CFRA Research analyst Garrett Nelson (Buy) believes Ford is the most well-positioned among traditional automakers to handle these challenges. "While the company's language has been cautious, we believe that primarily reflects management's desire to underpromise and overdeliver," Nelson adds.