Google Stock Could Benefit from Expected Layoffs: Piper Sandler According to Investing.com

Investing.com – Google’s parent company, Alphabet (NASDAQ:), could see its stock price rise significantly on expected cost-cutting measures, according to Piper Sandler analysts.

The company sees potential benefits from reducing staffing and operating costs, which could offset current antitrust challenges.

“We recently wrote about the antitrust situation at GOOGL, which we consider complex but manageable. However, with the addition of new CFO Anat Ashkenazi, we see a new opportunity to reduce expenses,” Piper said.

The key opportunity, according to analysts, is the potential of the new CFO, Anat Ashkenazi, to optimize the company’s expenses.

The company’s memo compares Alphabet to 17 other tech competitors and shows a clear path to savings in two main areas: “moderate employment” and “lower operating costs per capita.”

Piper Sandler analysis indicates that these cost reductions are having a positive impact on the company’s stock, estimating potential growth of 12%.

This is seen as an attractive opportunity, especially given the recent poor performance of Google shares.

We looked at layoffs and hiring in the technology industry at 17 leading technology companies,” said Piper Sandler. “Last year, the number of layoffs reached 317,000. (+31% y/y); however, employee numbers in the 17-leader cohort are only slightly below peak. The industry is leaner than the layoff headlines would suggest.”

They added that at PLN 820,000 dollars per person, GOOGL’s revenue cost is above average ($570,000 per person), but seems appropriate. However, “Opex at 510 thousand USD/pcs is well above average.”

“After benchmarking, we see an opportunity to cut heads in GOOGL and reduce employee operating costs,” the company adds.

Piper Sandler maintained an “Overweight” rating and $200 price target for Alphabet.