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Alphabet (GOOG, GOOGL), the parent company of Google, is scheduled to report second-quarter results after the market close on Tuesday, July 26, with a conference call scheduled for 5:00 pm ET. What to watch for:

PRICE TARGET CUTS AHEAD OF RESULTS: Stifel analyst Scott Devitt lowered the firm's price target on Alphabet Class A shares to $145 from $155, while keeping a Buy rating on the stock ahead of the company’s quarterly results. The analyst also trimmed his advertising revenue estimates to account for third-party ad agency estimates that call for slower industry growth in 2022 and 2023 than previously expected. Devitt expects volatility in results and estimates in the near-term given current macro uncertainty and recession risk, but continues to view Alphabet's valuation as attractive.

Meanwhile, Mizuho analyst James Lee lowered the firm's price target on Alphabet to $150 from $175 but also kept a Buy rating on the shares. The analyst's Google advertising call indicates second quarter pricing trends remained strong from mix shift to travel/services, increased offline retail demand, and ad pricing inflation. However, he believes consensus fiscal 2023 revenue growth of 15% year-over-year "appears aggressive" given the likelihood of a consumer spending slowdown. Nonetheless, the analyst expects Alphabet is more resilient than peers given its diverse advertiser base capturing offline and service revenues.

Last week, their peer at Truist also lowered his price target on the shares to $150 from $175 as part of a broader research note on Digital Advertising Platforms. Analyst Youssef Squali cited several headwinds to top-line growth for the company, including tough year-over-year comps, pressure in DR advertising on YouTube, FX from a stronger U.S. dollar, and lower monetization from YouTube Shorts. Squali added, however, that while he expects second quarter to show material growth deceleration on the top-line, he also expects margins to remain relatively stable. He kept a Buy rating on the shares.

Keeping an Outperform rating on the name ahead of the company’s quarterly results, Credit Suisse analyst Stephen Ju lowered the firm's price target on Alphabet to $143 from $170. In what the analyst believes will be the first of many adjustments to his estimates given deteriorating visibility, Ju decreased his forecasts for Google's advertising businesses as he received marketer feedback of declining budgets owing to macro uncertainty. While the extent of ad revenue compression for the third quarter and beyond remains unknown, it is clear marketers are showing signs of defensive behavior amid a downturn as they rotate budgets into Google in pursuit of higher ROI, the analyst contended.

CONSENSUS EXPECTATIONS: Current consensus EPS and revenue forecasts for Alphabet's June quarter stand at $1.30 and $69.99B, respectively. For full year 2022, EPS consensus is at $5.47, while revenue is at $294.63B.

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