Alphabet Inc (NASDAQ:GOOGL) are down nearly 3% in after-hours trading Monday, following the internet giant’s second quarter results. Specifically, Alphabet reported 2Q17 gross revenue of $26 billion, slightly exceeding consensus of $25.62 billion. Net revenue of $20.9 billion (excluding TAC) increased 19.4% Y/Y, and was in line with consensus. GAAP profits, which were affected by the European Commission fine, slumped nearly 28% to $3.52 billion. Operating income slumped to $4.13 billion, while operating margin fell to 16%. GAAP EPS of $5.09 exceeded consensus expectations largely due to a lower tax rate and higher interest/other income.
Baird’s top analyst Colin Sebastian commented, “At first glance, Alphabet’s Q2 results were essentially in line with our estimates, reflecting continuing healthy trends in the company’s core Search segment (albeit with higher TAC), and what appears to be strength in YouTube monetization. While the EC anti-trust fine dampened EPS, as expected, normalized operating margin is also in line with our estimate. No change to thesis.”
Sebastian rates GOOGL shares an Outperform with a price target of $1100, which implies an upside of 12% from current levels.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Colin Sebastian has a yearly average return of 24.5% and a 79% success rate. Sebastian is ranked #15 out of 4608 analysts.
Out of the 26 analysts polled in the past 3 months, 22 rate Alphabet stock a Buy, while only 4 rate the stock a Hold. With a return potential of 8%, the stock’s consensus target price stands at $1,080.68.