Top Analyst Believes Alphabet (GOOGL) Is Skating on Thin Ice, But Remains Bullish on the Stock Ahead of Earnings

Despite the fact that Alphabet (GOOGL) has some splainin’ to do, top analyst Brian White from Monness says the stock is still a Buy and he has positive expectations ahead of the company’s third-quarter earnings scheduled for tomorrow after the closing bell. White believes the stock offers 35% upside, as he reiterates a target price of $1,415.

White cited the tech giant’s tension with the Pentagon, the data breach that ended Google+ and skipping a Senate Intelligence hearing (just to name a few incidents) when detailing why the world’s largest search engine should be Googling janitorial services to try to clean up its act. Nevertheless, the analyst predicts 23% growth for this quarter and believes the company will meet his 3Q revenue estimate.

“We are forecasting Google Properties revenue in 3Q:18 to grow by 23% YoY to $24.31 billion and Google Network Members’ Properties revenue to increase by 11% to $4.83 billion for total Google Advertising revenue growth of 21% to $29.13 billion (86% of 3Q:18E sales). With our expectation of strength in mobile search and positive programmatic trends, total TAC is expected to grow but with improvement in site TAC. For Google Other revenues, we are projecting 3Q:18 sales to rise by 32% YoY to $4.73 billion and Other Bets revenue to rise by 49% to $174 million,” White said.

Looking ahead, the bull predicts an increase of 21% year over year for Q4, with a forecast of $39.02 billion in sales and an EPS of $11.73. The sales calculation is slightly less optimistic than the Street’s, which assumes a revenue of $39.31, but a bit higher than the EPS, which is estimated to be $11.09 for the fourth quarter.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Brian White has a yearly average return of 16.6% and a 64% success rate. White has a 75% average return when recommending GOOGL, and is ranked #84 out of 4,886 analysts.

While Alphabet was pouring some bleach into the mop bucket, TipRanks was reviewing 18 analysts in the last three months to see what they make of the stock. The results: 17 analysts are bullish on Alphabet stock, while only 1 remains ambivalent. The 12-month average price target stands at $1,393.29, marking a 32% upside from where the stock is currently trading. (See GOOGL’s price targets and analyst ratings on TipRanks)

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