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Google Shares Jump on Credit Suisse Price Target Boost Ahead of Earnings

Credit Suisse says new product adoption could boost Google's total addressable ad market closer to $3 trillion in the coming years.

Alphabet  (GOOGL) - Get Alphabet Inc. Class A Report shares jumped higher Friday after analysts at Credit Suisse boosted their price target on the Google parent ahead of next week's second quarter earnings on the strength of innovation-lead gains in it crucial advertising business. 

Credit Suisse analyst Stephen Ju, who carries an outperform rating on the stock, lifted his price target by 21.5% to $3,350 per share, citing the impact of new product launches that will expand the group's total addressable ad market to around $3 trillion as it targets both larger and small-to-medium sized businesses with real-time inventory listings that can link to its search and map facilities.

Credit Suisse sees 2021 revenue growth rates of 41% for YouTube and 30% for the entire Google ad business. Traffic acquisition costs are likely to be higher, however, given Alphabet's build-out of its data center as well as enhanced payments to YouTube content providers.

"Given Google’s global footprint it is worth noting that nearly all advertising sectors are on pace to exceed our expectations for the quarter. And while overall ad budget recovery propelled recent results, we cast our eyes forward to the more important product-driven and durable contributors to ad volume and pricing growth for 2H21 and beyond," said Ju. 

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"As a logical progression from the initial move to onboard incremental retail/e-commerce inventory with the release of the free listings tranche for Shopping, Google is now following up with an ability to more easily scan in-store products which then automatically appear in the Business Profile section of Search and Maps," he added. "By simplifying offline catalog ingestion, users now have access to real-time inventory information which should help drive conversion and thus incremental ad dollars over time."  

Alphabet shares were marked 1.3% higher in early trading Friday to change hands at $2,601.63 each. 

Alphabet will report its second quarter earnings after the close of trading on Tuesday July 27, with analysts looking for a topline figure of $51.156 billion and earnings of $19.34 per share, a 91% increase from the same period last year.