Market Overview

Alphabet Shares Still Cheap; Victor Anthony Raises Target To $990

Alphabet Shares Still Cheap; Victor Anthony Raises Target To $990
Related GOOGL
The Market In 5 Minutes
Why Google Is Tesla's Biggest Competitor
S&P 500 Set For Record High: These 2 Stocks Just Broke Out To Buy Range (Investor's Business Daily)
Related GOOG
Sector Surprises In A Popular Low Vol ETF
Why Google Is Tesla's Biggest Competitor

Alphabet Inc (NASDAQ: GOOGL) reported its 2Q16 revenues and EPS ahead of expectations on accelerating ad growth and margin expansion, Axiom’s Victor Anthony said in a report. He maintained a Buy rating on the company, while raising the price target from $970 to $990.

Alphabet reported 2Q net revenues of $17.53B, representing 22.1 percent y/y growth, up from 18.4 percent recorded in the previous quarter. The figure beat expectations by 4 percent. Google segment operating margins expanded by 105bps y/y and 186bps sequentially to 40.3 percent, versus 34.1 percent for the company as a whole.

Non-GAAP EPS came in at $8.42, ahead of expectations. Google websites growth accelerated to 24.2 percent, driven by 37 percent y/y growth in paid clicks and a 9 percent y/y decline in pricing, which was lower than the 12 percent decline recorded in 1Q16.

Related Link: Innovation Will Continue To Drive Alphabet Going Forward

Multiple Revenue Drivers Ahead

In 3Q16, revenue growth “should benefit from Expanded Text Ads (iProspect saw 10-20% higher CTRs), device bid modifiers, and responsive display ads,” Anthony mentioned. He expects growth in the coming quarters to be boosted by increases in mobile pricing, growth of search in emerging markets, YouTube, growth of the Google Display Network, shopping ads and new initiatives in verticals like hotels, autos, and finance.

The adj. EBITDA estimates for 2016 and 2017 have been raised from $36,197mn to $35,977mn and from $42,887mn to $42,493mn, respectively. Anthony added, “The shares are cheap relative to growth and relative to the peer group.”

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for GOOGL

Apr 2017BMO CapitalDowngradesOutperformMarket Perform
Mar 2017Loop CapitalInitiates Coverage OnHold
Mar 2017BarclaysInitiates Coverage OnOverweight

View More Analyst Ratings for GOOGL
View the Latest Analyst Ratings

Posted-In: axiom Victor AnthonyAnalyst Color Long Ideas Price Target Reiteration Analyst Ratings Trading Ideas Best of Benzinga


Related Articles (GOOG + GOOGL)

View Comments and Join the Discussion!