Ahead of Alphabet Inc GOOGL GOOG’s fourth-quarter fiscal 2015 earnings call on Monday afternoon, JMP analysts Ronald V. Josey, Andrew Boone, Ignatius Njoku and Shweta Khajuria reiterated an Outperform rating and $880 price target on the stock.
The experts based their bullishness on the belief that the 2015 holiday season was “relatively strong” for online advertising -- Search & Social. Checks have suggested healthy Search advertising trends, with mobile driving much of the growth – while also impacting CPCs to a certain measure. Consequently, the analysts believe revenue and profitability figures for the quarter will come in ahead of their initial expectations.
The firm’s $880.00 price target is based on its sum-of-the-parts analysis for 2017, where they value core Google at 11.5 times their 2017 EBITDA estimate and Alphabet’s Other Bets at what they view as a “conservative” 0.9 times their $1 billion revenue projection.
The experts justify this sum-of-the-parts valuation “given Alphabet’s multiple growth opportunities, including search, mobile, video, and display, among others.”
For 2016, the analysts are modeling total gross revenue of $84.8 billion (up 14.6 percent year-over-year), net revenue of $69.8 billion (up 16.3 percent year-over-year), EBITDA of $35.1 billion (up 19.8 percent year-over-year, on a 50.2 percent margin), and PF EPS of $35.13.
Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.
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