Courtesy of Benzinga.
MKM’s Rob Swanson commented on Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL)’s earnings outlook days before the company is expected to report on July 28. After further analysis, the analyst reiterated Alphabet’s Buy rating with a $930.00 price target.
Swanson believes Street expectations are “reasonable” and “possibly conservative on margins.”
The analyst said website revenue should be a “primary focus,” as many believe Google’s ad budget allocations were “slipping,” according to Swanson.
Drivers
Swanson thinks secular drivers are very strong, especially mobile search and internet video. Due to these drivers, the analyst believes Alphabet’s position is “excellent” and valuation is “attractive.”
Increasing Margins
The MKM analyst thinks Wall Street consensus on Alphabet’s operating margins is conservative, explaining that margins probably won’t be flat year-over-year after they have expanded over the past four quarters.
‘Tough Comps’
“We think investors are over-estimating the anniversary effect on tough comps. Websites revenue growth was already accelerating in 2Q, before the third link was added,” stated Swanson. The analyst believes currency drag on Alphabet will be lower than last year.
Olympics And Elections
Olympics and U.S. elections combined are expected to contribute $5 billion to ad spending in the second half of 2016, according to the analyst.
At the time of writing, Alphabet (GOOGL) traded at $759.17, flat shortly after Monday’s opening bell. Alphabet (GOOG) was down 0.12 percent at $741.87 during the same check.
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Latest Ratings for GOOGL
Date | Firm | Action | From | To |
---|---|---|---|---|
Jun 2016 | Goldman Sachs | Maintains | Buy | |
Jun 2016 | Maxim Group | Maintains | Overweight | |
Apr 2016 | SunTrust Robinson Humphrey | Maintains | Buy |
View More Analyst Ratings for GOOGL
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