YouTube And Mobile Will Drive Alphabet's Q1 Earnings, Says Goldman Sachs

Alphabet Inc GOOGL is scheduled to report its 1Q16 results on April 21. Goldman Sachs’ Heather Bellini maintained a Buy rating on the company, with a price target of $890.

Bellini expects Alphabet to report net revenue (ex-TAC) of $16.7 billion, with non-GAAP EPS of $8.07, marginally above the consensus expectations.

Net ad revenue for the quarter is estimated at $14.7 billion. Bellini pointed out that checks suggest Alphabet “can hit this number and come in above consensus of $14.4bn.”

“We view 1Q16 as the beginning of enhanced fiscal discipline driven by CFO Ruth Porat, given much of the CY15 plan was put in place by her predecessor,” Bellini stated.

Mobile & YouTube

Bellini expects mobile and YouTube to continue to be the “key drivers of strength” for the company.

The analyst also noted a majority of checks suggested that Google spend had been in line with or above expectations, with some attributing this to accelerating growth.

“Partners said that smartphones continue to drive click volume and PLAs were cited once again as coming in above expectations,” the analyst mentioned.

Click & CPC

Bellini estimates aggregate paid clicks growth of 32 percent year-on-year for 1Q16, ahead of the 31 percent for the previous quarter.

Aggregate CPCs are likely to have seen 11 percent growth during the quarter, on easier comps. “We believe weakness in CPCs can be offset by click volume as we saw last quarter,” the analyst said.