5 Takeaways From Alphabet's Q2, Courtesy Of JPMorgan

Related Link: Alphabet Shares Still Cheap; Victor Anthony Raises Target To $900

5 Takeaways

1. Alphabet's FXHN (foreign exchange and hedging neutral) revenue growth rose from 23 percent in the prior quarter to 25 percent in the most recent quarter and was the company's strongest growth level in more than four years.
2. Alphabet's non-GAAP operating income came in 7 percent ahead of consensus estimates at $7.5 billion with upside coming from both the Google segment and a smaller-than-expected loss in the "Other Bets" category.
3. The company's management team maintained a cautious tone around the bottom half of the year's comps due to the third mobile ad unit. As such, the analyst expects Alphabet's FXHN revenue growth to slow down to 19 percent in the third quarter and then again to 17.5 percent in the fourth quarter.
4. The analyst's 2016 estimates were revised 1 percentage point higher but 2017's estimates remains flat for revenue and up 3 percent/1 percent for non-GAAP earnings per share.
5. The analyst's bull case on Alphabet remains unchanged as the company will continue to benefit from strong revenue growth, continued cost discipline, an improved capital structure and capital returns to shareholders.

Bottom line, Anmuth stated that Alphabet's stock is still "attractive" at its current valuation of 24x his 2017 estimated GAAP earnings per share and 19x on his 2017 estimated non-GAAP earnings per share.

Shares remain Overweight rated with an unchanged $950 price target.

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