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Alphabet stock expected to recover from selloff as analysts find strength in earnings


Shares of Alphabet Inc. fell 6% on Friday, after the company missed profit expectations for the first quarter, but analysts remained bullish on the Internet giant’s prospects despite reigning in their price targets.

While there were no major ratings changes on Alphabet’s GOOGL, +0.60% GOOG, +0.61% stock through Friday morning, Goldman Sachs lowered its 12-month price target on the stock to $850 from $890 and Morgan Stanley cuts its target to $850 from $900. Other target decreases came from Baird, to $860 from $880; B. Riley, to $875 from $930; Susquehanna Financial, to $930 from $950; and Deutsche Bank, to $1080 from $1100.

But the target cuts weren’t necessarily an indication of broader concerns about Alphabet’s fundamentals. Most analysts believe the stock will recover from post-earnings blues and continue to outperform. The average rating on the stock among a poll of roughly 50 analysts is the equivalent to buy, while the median target price of $908.60 implies 23% upside to recent trading prices.

Even with Friday’s decline, shares of Alphabet are up more than 33% over the last 12 months, compared with the S&P 500’s 0.9% decline.

“While [Alphabet] reacted negatively on the headline numbers, we thought it...