Google's Big Earnings Beat: What Wall Street Is Saying

Google doesn't report YouTube results, but analysts think the platform contributed greatly to Google's quarter.
By Jacob Sonenshine ,

Google (GOOGL) - Get Report beat both revenue and earnings expectations for its second-quarter 2019. Analysts all over Wall Street are raising their price targets on the search giant. This gives investors a lot to like. 

The stock was rising 8.64% to $1,135 a share Friday. 

Earnings per share was $14.21, rising 21% year over year, vs. analysts estimates of $11.30. Revenue was $38.9 billion, a 19% increase over last year's revenue, beating expectations of $38.15 billion. Operating margin rose to 23.5%, up from last quarter's 18% margin, as the search giant keeps previously rising costs under control. Cloud revenue was $8 billion, 14% better than expectations of $7 billion. Google's board has also authorized a $25 billion share buyback program.

More than 10 analysts raised their price targets Friday. 

Alphabet, Google's parent company, is TheStreet's premium site Real Money's Stock of the Day.

RBC Capital Markets, Outperform, New Price Target Jumps to $1,425 From $1,300

"Cloud Killin' It - GOOGL disclosed GCP & G Suite at $8B run rate (higher than our $7B est), and management intends to triple cloud salesforce. Move over streaming wars...here come the cloud wars," analyst Mark Mahaney wrote in a note, as Google looks to better compete with cloud powerhouses Microsoft (MSFT) - Get Report and Amazon (AMZN) - Get Report

Mahaney added, "YouTube Thrillin' It - the number of YouTube channels with more than 1 million viewers growing 75% year over year." 

"We continue to believe FY19 Op Margins will be roughly stable." 

Mahaney raised his 2020 EPS estimates to $75.12 from $66.88.

Barclays, Overweight, New Price Target Goes to $1,385 From $1,315

"After the shell-shocking first-quarter print, these results should go a long way toward restoring damaged investor confidence," analysts Ross Sandler wrote in a note. "At 22.8 times 2020 GAAP EPS and with regulatory headline risks lurking around every corner, some of our optimism is starting to get priced in. But as we look across large-cap tech and the overall S+P, there are few companies with the scale and growth profile of GOOGL, in our view." 

Stifel, Hold, New Price Target Upped to $1,299 From $1,287

Still, "Our GAAP operating income estimates for 2019 are flat and down -3% in 2020 as higher revenue assumptions are offset by lower margin expectations given softer GM trends (due to core investments, cloud and hardware) and an increased expectation for headcount growth to support operations and to account for the Looker acquisition," analyst Scott Devitt wrote in a note. Devitt is looking for 2020 EPS of $667.82. 

Deutsche Bank, Buy, Price Target Unchanged at $1,400 

"We came away encouraged by the improved quantity and quality of business disclosures after countless quarters of being dissatisfied by the magnitude of business insights gained from the calls," wrote analyst Lloyd Walmasley. Hopefully this trend continues. Other impressive stats include YouTube channels with more than 1 million subs growing +75% year over year, YouTube Premium in 60 countries (up from 5 from start of 2018), Waymo now having more than 1,000 active riders participating in Waymo One, with 10B miles driven in the simulation." 

Find out if Google, Amazon or Microsoft are holdings in Jim Cramer'sAction Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells those? Learn more now.

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