Alphabet’s (GOOGL) Earnings At First Glance; Top Analyst Weighs In


Google parent Alphabet (NASDAQ:GOOGL) announced its first-quarter earnings this evening, and yet again, it brought in a ton of cash, almost entirely from Google’s advertising business.

The internet giant generated $31.15 billion in gross revenue, exceeding consensus estimates of $30.25 billion. Roughly $26.42 billion of that revenue, or about 88%, came from Google’s ad sales. Alphabet reported $7.63 billion in profit for the quarter, slightly below consensus of $7.71 billion, while EPS of $9.93 was above consensus of $9.28, partially driven by lower a lower tax rate.

“Our ongoing strong revenue growth reflects our momentum globally, up 26% versus the first quarter of 2017 and 23% on a constant currency basis to $31.1 billion. We have a clear set of exciting opportunities ahead, and our strong growth enables us to invest in them with confidence,” said Ruth Porat, CFO of Alphabet and Google.

Baird’s top analyst Colin Sebastian commented, “At first glance, no change to our thesis as Q1 results reflect solid topline outperformance, partially offset by continued aggressive investments. Google advertising revenue growth outpaced consensus expectations, while operating profitability was impacted by continued elevated TAC levels (Sites TAC growth accelerated to +60.7% Y/Y, but should moderate as Safari deal terms lapped beginning in 2Q18), higher levels of stock-based compensation (including hiring), and presumably ongoing investments in Cloud/YouTube.”

As such, the analyst reiterates a Buy rating on Alphabet shares, with a price target of $1,300, which represents a potential upside of 21% from Monday’s closing price.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Colin Sebastian has a yearly average return of 26% and a 76.5% success rate. Sebastian has a 19.1% average return when recommending GOOGL, and is ranked #10 out of 4783 analysts.

Wall Street agrees with Sebastian that this internet giant is one to watch, as TipRanks analytics exhibit GOOGL as a Strong Buy. Out of 27 analysts polled in the last 3 months, 25 are bullish on Alphabet stock while 2 remain sidelined. With a return potential of 22%, the stock’s consensus target price stands at $1,306.