What to Watch For in Alphabet's Q3

Technology

Published: October 25, 2018 12:40 pm

Last Updated: January 11, 2020 3:50 pm

Alphabet Inc. (NASDAQ: GOOGL) is scheduled to report its most recent quarterly results after the markets close on Thursday. Consensus estimates from Thomson Reuters are calling for $10.42 in earnings per share (EPS) and $34.04 billion in revenue. The third quarter of last year reportedly had $9.57 in EPS and $27.77 billion in revenue.

The company blew out the latest earnings numbers, and with a wide and bountiful silo of products and services, the stock remains almost unchallenged. It should be noted that traffic acquisition cost relief drove 20% gross profit growth, despite heavy cloud infrastructure and YouTube content investment.

In its most recent quarter, traffic acquisition costs (TAC) to Google Network Members and distribution partners totaled $6.42 billion at the end of the quarter, up from $5.09 billion in the same period last year. Total TAC as a percentage of Google advertising revenues was 23% for the quarter, up from 22%.

At the same time, paid clicks on Google properties increased 58% year over year and 15% quarter over quarter. The cost-per-click on Google properties decreased 22% year over year and 10% sequentially.

Excluding Thursday’s move, Alphabet has barely outperformed the broad markets, with its stock up about 7% in the past 52 weeks. However, in just 2018 alone, the stock is flat.

Here’s what analysts had to say about Alphabet ahead of the report:

Credit Suisse has an Outperform rating and a $1,500 price target.
Wedbush has an Outperform rating with a $1,350 price target.
Pivotal Research has a Hold rating with a $1,010 price target.
Macquarie has a Buy rating with a $1,250 price target.
Morgan Stanley has an Overweight rating with a $1,515 target.
MKM Partners has a Buy rating with a $1,465 price target.

Shares of Alphabet were last seen up 3.5% at $1,093.61 on Thursday, with a consensus analyst price target of $1,387.31 and a 52-week trading range of $984.00 to $1,291.44.