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Google's (GOOGL) - Get Alphabet Inc. Class A ReportQ3 earnings miss was not only rather benign, but actually contained some positive enough elements for analysts to raise their price targets on the search giant. The miss was driven by some non-recurring events and elevated costs that analysts don't expect to swell from here, while revenue growth across segments generally impressed. 

GAAP earnings per share came in at $10.12, missing Wall Street estimates of $12.32. EPS grew 18% year-over-year. Revenue was $40.5 billion, beating analysts estimates of $40.307 billion and growing 20% year-over-year. Google's operating margin was 23%, lower than last year's third quarter margin of 26% and lower than analyst's expectation of 23.4%.

Google's advertising revenue grew 17% to $33.9 billion. Cost-per-click grew 3% year-over-year, against last year's third quarter growth rate of negative 2%. Traffic acquisition costs grew 6% to a larger-than-expected $7.49 billion. 

Google shares were falling 0.77% to $1,279 Tuesday morning.

Here's what analysts said about the quarter:

Goldman Sachs, Buy, Price Target Raised From $1,400 to $1,500

"Management noted that revenue growth was driven by mobile search, YouTube, and Cloud, similar to last quarter. GAAP EPS of $10.12 included a below-the-line headwind of $1.92, of which $1.47 was related to $1.5bn of losses on equity securities. We note that the results included ~$550mn recognized in general and administrative [expense] in the quarter related to a legal settlement in France. Headcount increased 6,450 from 2Q 2019, with the majority of new hires engineers and product managers. The company commented that while headcount growth on an absolute basis was unusually high, they remain on pace for headcount growth in 2019 to be in line with growth in 2018 when they added 18,661 employees. For 4Q 2019 we forecast quarter-over-quarter growth in operating expenses of 17% (excluding fines in 3Q) versus the prior year of 21%." 

- Heather Bellini

Oppenheimer, Outperform, Price Target Raised From $1,370 to $1,530

"Growth remains steady, driven by YouTube, mobile search and Google Cloud Platform. Excluding $554 million legal settlement in France and non-cash mark-to-market of investments, EPS increased +13% year-over-year, 2% and 7% above Opco and Street [estimates]. Share repurchases increased +59% quarter-over-quarter and we are now assuming steady buybacks." 

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TheStreet Recommends

- Jason Helfstein

Barclays, Overweight, Price Target Raised From $1,385 to $1,400

"Key Take-Away: GOOGL reported revenue +1% above consensus but EPS -18% below, which included around $2.50 per share hit for legal fees and the current stamp of Google's equity minority stakes. The pace of new product launches is as high as we've seen from Google, across Search, YouTube, Cloud and Hardware. We are increasing our price target from $1,385 to $1,400, as we roll forward our valuation to reflect an average of our fiscal year 2020 and 2021 estimates vs. just fiscal year 2020 previously."

- Ross Sandler

JPMorgan, Overweight, Price Target Raised From $1,420 to $1,460

"We believe Alphabet's fundamentals are strong and that the company will remain a primary beneficiary of the secular shift to online spending. Google remains focused on innovation across its advertising businesses and new offerings, which is helping Google sustain a dollar growth off of a large base. We continue to believe there is meaningful runway across search and YouTube as return on investment improves and TV dollars shift more online. Google Segment's other businesses such as Cloud, Play, and Hardware have strong momentum." 

- Douglas Anmuth

Duestsche Bank, Buy, Price Target Lowered From $1,600 to $1,550

"We got most of what we wanted this quarter. Net net we think the quarter was solid, though we are not surprised the stock is not trading higher after-hours given the run-up into earnings (+5.8% vs 2.1% for the S&P 500 over the past month). We continue to see Alphabet shares well positioned to benefit from an ad product cycle in 4Q and into 2020, continued gains in the Cloud business, increasing share repurchase. We slightly reduce our EPS estimates, largely on a more conservative margin outlook." 

- Lloyd Walmsley 

Google shares are up 20%year-to-date. 

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