MKM Partners: Google Valuation Attractive, 'Inexpensive On Any Metric'

Swanson believes Street expectations are "reasonable" and "possibly conservative on margins."

The analyst said website revenue should be a "primary focus," as many believe Google's ad budget allocations were "slipping," according to Swanson.

Drivers

Swanson thinks secular drivers are very strong, especially mobile search and internet video. Due to these drivers, the analyst believes Alphabet's position is "excellent" and valuation is "attractive."

Related Link: Remember When Yahoo Turned Down $1 Million To Buy Google?

Increasing Margins

The MKM analyst thinks Wall Street consensus on Alphabet's operating margins is conservative, explaining that margins probably won't be flat year-over-year after they have expanded over the past four quarters.

'Tough Comps'

"We think investors are over-estimating the anniversary effect on tough comps. Websites revenue growth was already accelerating in 2Q, before the third link was added," stated Swanson. The analyst believes currency drag on Alphabet will be lower than last year.

Olympics And Elections

Olympics and U.S. elections combined are expected to contribute $5 billion to ad spending in the second half of 2016, according to the analyst.

At the time of writing, Alphabet (GOOGL) traded at $759.17, flat shortly after Monday's opening bell. Alphabet (GOOG) was down 0.12 percent at $741.87 during the same check.

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