Alphabet A: Color on Qtr
28/10/2016 à 08:46:53 ET
- Stifel Research raises tgt to $950 from $925. GOOGL beat 3Q revenue / profitability estimates as it continues to see strength from mobile search, video, programmatic, and Google Play. Alphabet has successfully comp'ed the first full quarter of the addition of a third mobile ad unit and continues to see runway for growth in its core ad business, while investing in other areas such as Google Cloud and hardware. Traffic Acquisition Costs (TAC) as a percentage of gross advertising revenue increased +5% q/q as higher TAC for mobile search offset the benefit from the mix-shift from Network to Sites. Management also noted marketing spend will likely be elevated in 4Q as new Google hardware products are promoted over the holidays. Alphabet authorized a ~$7B share buyback program this quarter.
- Needham Research notes Alphabet delivered 3Q16 upside, highlighted by solid Google Website's growth and cost controls. Mobile search and video were the key growth driver in Q3 with programmatic supplementing the strong growth. Firm believes the company is well positioned to deliver strong results in 4Q16 from these focus areas. Mobile search and YouTube continued to lift paid clicks, but weighed on CPC rates. Management highlighted that desktop and tablet search also continued to grow. Management also reported strong growth in Google Play and the Google Cloud with the latter a key investment area.
- Mizuho Securities raises tgt to $1025 from $1020. Firm notes GOOGL remains top pick after a solid 3Q beat. Despite tough comps, Google was able to grow its revenue by 23% ex-FX to $22.5b, vs. 25% in 2Q, on continued advertising strength from mobile, YouTube and Programmatic. GOOGL remains unique among large caps - there are very few companies with a revenue base of ~$90b growing 20%+ YoY with operating margins of 40%+. Firm remains optimistic as we move into 4Q as improved ad formats, new AI-based hardware, and cloud services, should drive ~20%+ revenue growth.
- Pivotal Research notes Alphabet reported very good 3Q16 results with better-than expected top and bottom-line results once again. Capital expenditure growth was also constrained. Valuation on Alphabet stock at $1,090 per share on a YE2017 basis and maintain Buy recommendation. EBITDA margins were up from 31.9% in the year-ago quarter to 32.8% during this one led by reduced expenditures at "Other Bets." Capital expenditure spending growth was once again relatively constrained in the quarter. Although the company calls out its expansion in mobile search, video and programmatic advertising activity as leading sources of growth, firm sees mobile search growth as generally cannibalizing its own non-mobile search activity and see programmatic advertising as cannibalizing non-programmatic sales of its display network GDN. Does appear to us that YouTube is making progress in capturing share of online video while also making an increasingly plausible case for capturing traditional television budgets. Overall, retain favorable view on Alphabet.
Shares of GOOGL are trading higher by 1% in pre-market.