Alphabet (GOOG, GOOGL), the parent company of Google, is scheduled to report third-quarter results after the market close on Tuesday, October 25, with a conference call scheduled for 5:00 pm ET. What to watch for:

PRICE TARGET CUTS AHEAD OF RESULTS: On Tuesday, KeyBanc analyst Justin Patterson lowered the firm's price target on Alphabet to $120 from $125, while keeping an Overweight rating on the shares ahead of quarterly results. Amid mounting concerns on a downturn in 2023, the analyst observes investors are increasingly skeptical of Street revenue growth at Meta Platforms (META) and Alphabet and are instead focused on capital allocation and expense discipline. While he anticipates flattish-to-low single-digit EPS growth at both companies, Patterson believes progress with cost containment initiatives could reassure investors that 10%-plus revenue growth and high-teens to 20%-plus EPS growth is attainable in a 2024 recovery.

On Friday, JPMorgan analyst Doug Anmuth also lowered the firm's price target on Alphabet to $136 from $140, maintaining an Overweight rating on the shares ahead of the company's third-quarter results. Sentiment remains cautious across the internet sector with secular growth slowing, competition increasing, and macro concerns weighing, Anmuth told investors in a research note. The analyst trimmed estimates and price targets for companies with significant currency exposure.

Meanwhile, Deutsche Bank analyst Benjamin Black lowered the firm's price target on Alphabet to $130 from $135 but kept a Buy rating on the shares ahead of the quarterly results. The analyst thinks the setup for Alphabet is "somewhat difficult" and the company has a "fairly high bar to clear for a post-print rally."

Earlier this month, Credit Suisse analyst Stephen Ju cut the firm's price target on Alphabet to $134 from $140 and maintained an Outperform rating on the shares ahead of quarterly results. The analyst also decreased his FXN growth estimates for 2023 as advertiser conversations for online/digital budget growth indications are "understandably decelerating sharply" to mid-single-digits. With that in mind, the automation-of-advertising theme, which has placed Google as a relative share gainer amidst IDFA deprecation and subsequent macro uncertainty-driven outlook deterioration, will remain resilient through the second half of 2022, Ju said. Near-term, his checks indicate in-line results for third quarter and potentially modestly accelerating budgets for the fourth quarter. That said, similar to the first half of 2022 results, he has assumed greater Performance Max-driven allocation of budgets toward Search versus YouTube.

LARGER HEADWIND: During the company’s last earnings call back in July, Alphabet said it expected a larger headwind from foreign exchange in the third quarter. It also said that strong revenue from last year creates tough comps in Q3 and that the company saw headwinds in Q3 from fee changes and impact on buyer spend from Q2.

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