Market Overview

Analysts Applaud Alphabet Earnings: 'An Incredible Advertising Business'

Share:
Analysts Applaud Alphabet Earnings: 'An Incredible Advertising Business'

Shares of Google parent company Alphabet, Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL) jumped 9% on Wednesday after the company reported a better-than-feared slowdown in revenue growth in the first quarter.

Alphabet reported first-quarter earnings per share of $9.87 on revenue of $41.16 billion. Revenue was up 13% from a year ago. The company said ad revenues dropped off abruptly in March, but the declines haven’t gotten worse so far in April.

Several Wall Street analysts have weighed in on Alphabet stock following the report.

Impressive YouTube Numbers

Instinet analyst Mark Kelley said the highlights of the quarter were Google’s accelerating YouTube business and its impressive Cloud momentum.

“YouTube growth improved by 200bps relative to the 2019 exit run-rate as direct response growth remained strong through the end of the quarter and offset lighter brand spend that began to soften in mid-March (after accelerating in Jan/Feb) and total YouTube ad spend by the end of March had slowed to the high single digits,” Kelley wrote in a note.

Loup Ventures' Gene Munster said the fact that Google was able to keep advertising revenue growth virtually flat during the final three weeks of the quarter is surprising.

“A flat business in this environment is impressive, so hats off to them for an incredible advertising business,” Munster told CNBC.

Well-Positioned For Recovery

Morgan Stanley analyst Brian Nowak said Google’s improvements to efficiency and focus on innovation will help it become a stronger company in the post-crisis world.

“While our forward expected ad declines are less severe vs. previously expected, the deleverage (particularly in non-TAC COGS) is likely to be worse, as we are lowering our '20/'21 EBITDA by 5%/5%,” Nowak wrote.

Bank of America analyst Justin Post said Google is clearly not immune to coronavirus (COVID-19) impacts, but it's well-positioned to navigate the crisis and bounce back quickly.

“Google search is seeing a larger impact than expected, but we have high conviction on a search recovery with the economy given strong ongoing usage and broad macro exposure (earnings call suggested Search tracking with GDP).” Post wrote.

Ratings And Price Targets

  • Morgan Stanley has an Overweight rating and $1,400 target.
  • Nomura has a Buy rating and $1,700 target.
  • Bank of America has a Buy rating and $1,420 target.

GOOGL Class A shares traded up 8% to $1,339.14 at time of publication.

Related Links:

Alphabet, Boeing Shares Get A Lift Following Earnings, While GE Falls Short

Alphabet Shares Rise During Earnings Call As Q1 Advertising Revenue Better Than Expected

Latest Ratings for GOOG

DateFirmActionFromTo
May 2020Deutsche BankMaintainsBuy
Apr 2020UBSMaintainsBuy
Apr 2020Credit SuisseMaintainsOutperform

View More Analyst Ratings for GOOG
View the Latest Analyst Ratings

 

Related Articles (GOOG + GOOGL)

View Comments and Join the Discussion!

Posted-In: Bank of AmericaAnalyst Color Earnings News Price Target Top Stories Analyst Ratings Tech Best of Benzinga

Latest Ratings

StockFirmActionPT
TYGB of A SecuritiesUpgrades
ZIONB of A SecuritiesMaintains39.0
RFB of A SecuritiesMaintains13.0
PNCB of A SecuritiesMaintains123.0
HBANB of A SecuritiesMaintains11.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com