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Alphabet and Facebook Price Targets Cut at Barclays on Weaker Ad Outlook

Barclays cut its price targets on shares of Google parent Alphabet and of Facebook on a weaker ad outlook. But the analysts affirmed both at overweight. They expect revenue declines but not as big as others do.
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The price targets on Alphabet  (GOOGL) - Get Alphabet Inc. Report and Facebook  (FB) - Get Meta Platforms Inc. Report were cut at Barclays, which pointed to weakness in advertising, the main form of revenue for both.

The analysts cut their share price target for Alphabet to $1,300 from $1,635 and their target for Facebook to $175 from $260. They maintained their overweight rating for both Alphabet, Mountain View, Calif., and Facebook, Menlo Park, Calif.

“The recent [Interactive Advertising Bureau] survey is likely the best indication of Fortune 500 spending intentions and showed digital budgets cut back 38% for March/April and 28% for May/June,” the analysts, led by Ross Sandler, wrote in a report.

To be sure, the Barclays analysts don’t see the companies’ revenue falling as much as their buy-side contacts’ forecast of 20% to 30% year-on-year in the second quarter. 

The analysts anticipate a move of flat to down 10% for Alphabet’s Google and down 5% to 15% for Facebook.

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The reduced share-price targets reflect the stocks’ drop in recent weeks.

On the upside, the analysts said, “While the conversation is focused on these growth trends, we note that there is a real opportunity for megacap tech to shift the narrative from ‘bad guys’ to ‘good guys’ by helping society in ways that others can’t.

“Not just ad credits, but technology solutions that help consumers get back to their normal daily lives in a privacy-safe manner.”

At last check, Alphabet shares traded at $1,193.23, up 0.9%. Facebook at $168.08, up 1.5%. 

Over the past 12 months, Alphabet shares have lost 1%, Facebook shares 6%, and the S&P 500 index 8%.