Two Reasons Alphabet (GOOG) Could Outperform After Earnings - Nomura
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Nomura Securities analyst, Anthony DiClemente, reiterated his Buy rating on shares of Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) and thinks that expectations may be too low for earnings. The analyst believes Street models may imply too much deceleration in 3Q revenue growth. The challenging YoY comparison should be understood by investors gearing the street to expect a ~600bps slowdown in FX-neutral growth, as new ad formats should provide a partial offset.
The analyst believes the company could Outperform for two reasons:
1) prudent expense growth, partially offset by higher TAC and focused incremental investments, should translate into ~70bps YoY margin improvement.
2) a newly authorized share buyback could support investor confidence in the potential for further return of capital
No change to the price target of $925.
Shares of Alphabet closed at $799.37 yesterday.
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