Alphabet (GOOGL) (GOOG) 'Buy' Maintained at SunTrust Following Solid Q3
- Donald Trump Sworn in as 45th U.S. President
- Wall Street ends higher as Trump becomes president
- Walgreens Boots Alliance (WBA) Said to Face Antitrust Concern for Rite Aid (RAD) Fix - Bloomberg
- Bristol-Myers Squibb (BMY) Says It Won't Pursue Accelerated U.S. Regulatory Pathway for Opdivo Plus Yervoy in Lung Cancer
- Apple (AAPL) Sues Qualcomm (QCOM) Over Patent Royalties in Antitrust Case - Bloomberg
News and research before you hear about it on CNBC and others. Claim your 2-week free trial to StreetInsider Premium here.
Peck commented, "Alphabet reported a solid quarter decelerating growth to 23% which was less than feared based on tougher comps. Google Sites continue to drive the growth with paid clicks accelerating to 42% from 37% in 2Q. Further, impressively, the company did this on better margins (41.7% versus 41.2% expectation). Lastly, the company continues to balance LT growth investments (i.e. Cloud), with capital returns (announcing a $7B buyback). We remain a Buy with our $900 target (~19x 2018 PE)."
Peck's 3Q Key Points. 1) Revenue growth decelerated ~2-pts to +23% YoY ex-FX despite 3-pt tougher comps. Sitesgrew 23% YoY, led by Mobile and YouTube, with paid clicks up 42% and CPC down 13%. 2) Network growth of 1% YoY reflected growth in Programmatic and AdMob, offset by legacy declines. 3) Other Google revenue accelerated to +39% from 33% in 2Q, led by Play and Cloud. 4) US grew 22% YoY, UK 18% ex-FX, and RoW 25% ex-FX. 5)Total TAC rate declined modestly due to mix, but was UP for Sites and Networks to a record for 3Q. TAC to distribution partners grew to ~10% of Sites revenue versus 8% in the year ago period, primarily on Mobile growth. Network TAC increased to ~70% from ~68% over the same period, on higher Programmatic revenue. 6) Operating margins improved ~110bps despite higher TAC and investments. Core Google margins were down ~95 bps YoY on higher Other Cost of Revenue (data centers and YouTube content). 7) FCF was $7.5B or ~33% of revenues. GOOGL ended 3Q with ~$83B in cash, including ~$50B abroad. 8) In October, Board authorized ~$7B in share buybacks.
Shares of Alphabet closed at $795.35 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- M&T Bank (MTB) PT Raised to $165 at FBR Capital Following 4Q Beat
- UPDATE: SunTrust Robinson Humphrey Downgrades Simon Property Group (SPG) to Hold
- UPDATE: SunTrust Robinson Humphrey Downgrades Health Care REIT (HCN) to Hold
Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst EPS View
Related EntitiesSunTrust Robinson Humphrey
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!