Alphabet (GOOGL) is set to announced fourth-quarter 2018 results today after the market close. With shares down nearly 11% from their all-time high — albeit enabled by a rather intense broad-market pullback in that time — now is the time to consider what the parent company of Google will have to say when its latest release hits the wires.
Zooming out to Alphabet’s headline numbers, note the company doesn’t offer specific quarterly revenue or earnings guidance. So, for perspective, consensus estimates predict its quarterly revenue will have increased 25% to $34.05 billion, translating to earnings of $10.86 per share.
Zooming in, recall that Alphabet breaks its results down into two primary segments: Google and “Other Bets.” Google, for its part, includes products like Search, Chrome, YouTube, Gmail, Maps, Play, Cloud, and Android, as well as non-advertising businesses like Cloud, Play, Nest, and other hardware. So Google will continue to generate the vast majority of the company’s revenue.
Monness’ top analyst Brian White commented, “Given the data privacy scandals of 2018 and the subsequent threats of increased industry regulation casting a dark cloud over Alphabet, the stock significantly underperformed our universe last year. Although we expect the news flow to remain a headwind for Alphabet in 2019, and we would not rule out more industry scandals, we believe this is largely reflected in the stock.”
“We are forecasting Google Properties revenue to grow by 21% YoY to $26.82 billion in 4Q:18 and Google Network Members’ Properties revenue to increase by 13% to $5.64 billion for total Google Advertising revenue growth of 19% to $32.46 billion (84% of 4Q:18E sales). We expect TAC to remain manageable as demonstrated in recent quarters. For Google Other revenues, we are projecting 4Q:18 sales to rise by 22% YoY to $6.08 billion and Other Bets revenue to rise by 39% to $182.5 million,” White added.
All in all, White reiterates a Buy rating on Alphabet stock, with a price target of $1,315, which implies an upside of 15% from current levels.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Brian White has a yearly average return of 21.2% and a 69% success rate. White has a 1.9% average return when recommending GOOGL, and is ranked #31 out of 5142 analysts.
It appears consensus sentiment matches well with White’s bullish stance, with TipRanks analytics showing GOOGL as a Strong Buy. Based on 21 analysts polled in the last 3 months, all 21 are bullish on the internet giant. The 12-month average price target stands at $1,378.16 marking a 21% upside from where the stock is currently trading. (See GOOGLs price targets and analyst ratings on TipRanks)