Google Could Move 4% After Earnings...Spread Between A & C Shares Won't Increase, RBC Predicts
Wall Street is mixed on the issue. BMO's Daniel Salmon expects rising guidance in the coming quarters, while Credit Suisse's Stephen Ju likes the margin potential from YouTube and Google Play over a longer-term time frame. Societe Generale's Christopher Cherblanc added that the combination of large R&D expenses and physical infrastructure developments is great for Google's "core."
In a recent summary, RBC said options markets are hinting at a 4 percent implied move (up or down) in Google shares after earnings. The majority of investors, the firm noted, "are focused on Revs/Paid Clicks/EBITDA margins (in that order), and asking more questions" about 2016.
"We’ll be listening for any color on the “potential loss” of AAPL’s iOS business," RBC added. Analyst Mark Mahaney expects reacceleration in paid clicks, flat cost per click numbers, which could heal concerns of slowing mobile monetization.
The Spread Between GOOG And GOOGL
Of course, one trading idea is to simply play Google before or after earnings. A more complex idea, though, may be to monitor the spread between Google's Class A and Class C shares. RBC said its "Desk thinks the GOOG/GOOGL spread will hold steady (or possibly contract)."
On Thursday afternoon, Class A traded at $598 while Class C was near $574.
Latest Ratings for GOOG
|Jan 2017||Pacific Crest||Reinstates||Overweight|
|Jul 2016||JP Morgan||Maintains||Overweight|
|Apr 2016||Deutsche Bank||Maintains||Buy|
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