Following Alphabet Inc.’s fourth-quarter earnings release, analysts at Stifel have cut their rating on shares to hold from buy. The analysts, led by John Egbert, raise a number of “longer-term concerns,” including the impact of Amazon.com Inc.’s ever-expanding retail dominance on Google’s search segment. Egbert cites a third-party study saying that more than half of all consumer-product searches begin at Amazon: “This has the potential to cannibalize Google’s revenue from retail advertisers.” He added that Google’s traffic-acquisition costs have been rising as a percentage of total gross revenue. “Rising TAC presents a greater risk to multiple compression rather than margin erosion in the near term, though greater-than-expected TAC could continue to create a headwind to margin expansion,” Egbert wrote. He kept his price target of $1,150 unchanged. Alphabet shares are down 4.1% in premarket trading but up 44% over the past 12 months. The S&P 500 Index is up 24% in that time.
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