Alphabet drops most in three years after first quarter but analysts upbeat
(Reuters) - Ruth Porat couldn't have been clearer: Alphabet Inc's chief financial officer said on Thursday that Google's parent needed to step up investment to boost traffic.
Analysts agreed. Investors weren't so sure.
The company's shares closed down 5.46 percent at $737.42 on Friday, their biggest one-day percentage drop since October 2012.
The search giant's first-quarter earnings fell short of estimates, largely because it spent more to build traffic for its mobile advertising services.
Analysts, though, focused on the 20 percent rise in revenue from Google's websites, a key metric that met most expectations.
"When the misses are more headline than real. And fundamental trends are intrinsically impressive. And valuation looks compelling. Then that's when you buy," RBC Capital Markets analyst Mark Mahaney said in a client note.
Susquehanna Financial Group analysts agreed. "While headline numbers missed, the key revenue number was fine," they wrote.
Several brokerages, including Susquehanna, cut their price targets on Alphabet, but maintained "buy" recommendations.
RBC maintained its $1,000 price target. Continued...