Google's First Quarter As Alphabet: What's Coming?

Google will report its first quarterly results (scheduled for Thursday, October 22) since transitioning to the Alphabet Inc GOOG GOOGL holding structure.

Youssef Squali of Cantor Fitzgerald is expecting Alphabet to report "health" results, which include revenue of $15.0043 billion and EBITDA of $7.4549 billion.

Squali maintained a Buy rating and unchanged $720 price target ahead of the earnings release.

For the first time ever, Google will report its quarterly results under the new Alphabet structure.

The company is scheduled to report its third-quarter results on Thursday after market close. Youssef Squali of Cantor Fitzgerald is expecting the company to report revenue of $15.0543 billion, EBITDA of $7,454.9 billion and earnings per share of $7.23.

Squali's estimates are in-line with the consensus estimate, which is expecting the company to report revenue of $15.0378 billion, EBITDA of $7,481.2 billion and earnings per share of $7.21.

Justification

The analyst continued that Alphabet benefited from search and display on owned and operated sites in the U.S. and saw tailwinds from mobile, PLAs, programmatic and video. In addition, foreign exchange was a "slight" tailwind sequentially.

Related Link: Google Stands Out Amid Low Earnings Expectations

Squali added that while long-term concerns including partner network clean up, margin deterioration, capital intensity and regulatory issues remain a factor, he is "encouraged" by the "new tone/direction" set by the new CFO, Ruth Porat.

Squali also noted that he will look out for commentary from Google's (the subsidiary) now CEO Sundar Pichai. Specifically, the analyst will pay attention for key notes regarding his "strategic vision/philosophy" surrounding important topics, including the rise of mobile and its impact on search in an "app-dominated environment."

Finally, Squali pointed out that Alphabet won't begin its segment reporting until January 2016. He is expecting the company to offer commentary around paid click/CPC metrics and provide visibility into search and display's revenue and profitability profile.

Squali maintained a Buy rating and unchanged $720 price target.

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