Alphabet (GOOG) (GOOGL) PT Raised to $1070 at Mizuho Securities
Mizuho Securities analyst Neil Doshi reiterated a Buy rating and boosted his price target on Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) to $1,070.00 (from $850.00) following strong results.
Doshi commented, "Core Google's Non-GAAP operating margin (on net rev) was 47% in 4Q15, up 320 bps YoY. On top of that, total company revenue accelerated to 24% YoY growth in 4Q, and marks the fastest growth since 2012. Other Bets generated ~$450 million in 2015 revenue on ($3.1b) in operating losses. This goes to show that Core Google's biz remains vibrant and healthy as ever. We reiterate our Buy rating as GOOGL remains our #1 stock pick for 2016 Large Caps."
Key Positives. 1) Rev growth accel'd to 24% ex-FX, which is the strongest growth we’ve seen since 4Q12 and on an $8.4b larger revenue base vs. 4Q12; 2) Core Google operating margin was significantly higher than total company margin (47.0% vs. 39.5%); 3) Aggregate paid click grew 31% vs. up 23% in 3Q due to strength from TrueView ads; 4) 2.4m in share repurchases totaling $1.8b; the board authorized an additional 514k shares = $3.7b remains in the buyback program; 5) UK grew 20% YoY ex-FX, fastest growth since 4Q12 & US grew 24% YoY, the fastest since 3Q11.
Key Concerns. 1) Other Bets revenue of $448m in 2015 was lower than we had anticipated - MSUSAe ~$1b; 2) Other Bets 4Q15 operating loss of ($1.1b) increased significantly, ~2x YoY and ~26% QoQ; and 3) CapEx is expected to ramp up in 2016, in part due to the expansion of Google Fiber (CapEx declined 10% in 2015 after growing 49% in 2014).
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Shares of Alphabet closed at $752.00 yesterday.