Bob Peck Looks Forward To Google, Amazon Earnings

Bob Peck of SunTrust Robinson Humphrey previewed Alphabet's and Amazon's third quarter results.

Alphabet is scheduled to report its third quarter results after Thursday's market close. Peck is expecting the company to report revenue of $15.2 billion (versus Street estimate of $15 billion) while unfavorable foreign exchange rates continue to pressure the top line. The analyst lowest his EBITDA estimate to $7.5 billion from a prior $7.6 billion. Peck continued that while his revenue estimate assumes a "strong" 13 percent year over year growth, the company's results will likely be "overshadowed" by investor focus on the additional disclosures that are set to begin in the fourth quarter following the firm's reorganization under the new Alphabet structure. Peck added that the new structure should allow for a "greater investor focus" on the core revenue and profit drivers while offering more visibility towards the future. Shares remain Buy rated with an unchanged $770 price target.

Amazon is also scheduled to report its third quarter results after Thursday's market close. According to Peck, his $24.585 billion revenue estimate (representing a growth of around 20 percent year over year) is "reasonable" based on ChannelAdvisor data. The analyst noted that growth in the quarter was supported by "exceptional" performance on Prime Day. However, Peck added that Amazon has a "history of giving back" operational efficiencies to consumers through lower prices and "aggressively" investing to drive long-term free cash flow growth. Some of the initiatives include focus on marketplaces, Prime, and AWS. Accordingly, the analyst is expecting the company's margins to "trend lower" from the fourth quarter onwards and the stock will trade sideways. Shares remain Neutral with an unchanged $550 price target.