Bob Peck Praises Alphabet's Q4 Beat

• Alphabet Inc GOOGL shares have gained 17 percent since August 3.
• SunTrust Robinson Humphrey’s Robert S Peck maintained a Buy rating for the company, while raising the price target from $850 to $875.
• Continued execution, return of capital and relatively higher valuation and multiples compared to peers make Google’s stock attractive, Peck stated.

Alphabet reported robust 4Q results, with ex-FX revenue growth accelerating to 24 percent y/y, from a 21 percent increase recorded in 3Q. Revenue growth was driven by continued monetization momentum in various Google sites and network revenue.

“Segment breakout echoes our view of core strength and prudent “Bets” with a LT vision to drive innovation (link). We believe mobile and video monetization are inflecting, which could be a tailwind going forward as ad dollars migrate online,” analyst Robert Peck wrote.

Alphabet continues to be a favorite among advertisers for its reach, discoverability and measurability. “With 7 properties >1B users, lead in mobile, video and programmatic, and investing ahead of the curve (machine learning, AI, VR etc.), we feel few cos. in our universe offer as much optionality,” Peck commented.

Management continues to focus on investment ROI, while remaining open to debt financing and exploring partnerships to achieve commercialization of new products. The analyst believes that 2015 was a “digestion” year, but the company’s capital intensity is expected to increase on “cloud, fiber, machine learning, VR and YouTube content initiatives.”

The EPS estimates for 2016 and 2017 have been raised from $34.75 to $34.83 and from $40.31 to $40.37, respectively.