Bull Note, Quantum Computing Breakthrough Boost GOOGL Stock

The tech giant is expected to post its third-quarter results next Monday

Deputy Editor
Oct 23, 2019 at 11:44 AM
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FAANG name Alphabet Inc (NASDAQ:GOOGL) is slightly higher today on a bull note from Credit Suisse. The analyst lifted its price target to $1,700 from $1,500, citing "the strong growth of search and YouTube" and applauded the company's Smart Building product. Google is also generating buzz for claiming it's achieved a new milestone in quantum computing.

The stock is up 0.9% at $1,254.07 -- just days ahead of its third-quarter earnings report, which is expected out on Monday, Oct. 28, after the close. The sessions following the stock's last eight earnings reports have been split between positive and negative reactions, but Alphabet did clock a notable 9.6% next-day pop during this past quarterly release in July. During these last eight sessions, the security has averaged a 4.8% next-day move. This time around, the options pits are pricing in a slightly bigger swing at 5.7%. 

Since this massive late-July bull gap, GOOGL has been trading in a series of higher lows, with several pullbacks contained by the 160-day moving average. While the last few bounces off this trendline have attempted to catapult the stock back towards its April 29 record high of $1,296.97, pressure at the $1,260 region has kept a tight lid on the shares. Nevertheless, Alphabet boasts a nearly 20% gain for the year. 

GOOGL Chart Oct 23

Credit Suisse isn't the only one with high hopes for GOOGL. A whopping 27 of those in coverage call the security a "buy" or better, compared to only three who say "hold." On the other hand, the consensus 12-month target price of $1,426.41 is a modest 13.7% premium to current levels. 

The options pits have echoed this sentiment, with 1.33 GOOGL calls bought for every put on the the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) during the past 10 weeks. This ratio sits higher than 88% of all other readings from the last year, indicating a healthier than usual appetites for bullish bets of late. 

Today's analyst coverage has call activity running slightly hotter than usual, too, with 5,959 calls across the tape so far. It looks the weekly 10/25 1,260-strike call is the most popular, with contracts possibly being bought to open here for a volume weighted average price of $4.80. This means these traders are expecting GOOGL to settle north of $1,264.66 (strike plus premium paid) by the time these contracts expire this Friday, Oct. 25. 

 

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