Alphabet Inc Q3 2017 Earnings: Revival On Tap For YouTube

Alphabet Inc Q3 2017 Earnings: Revival On Tap For YouTube
Mizter_x94 / Pixabay

Alphabet Q3 2017 earnings are set for release today after closing bell, and Wall Street is projecting $8.33 per share in earnings on $27.2 billion in revenue. In last year’s third quarter, the tech giant reported $9.06 per share in earnings on $22.45 billion in revenue.

What to expect from Alphabet Q3 2017 earnings

Deutsche Bank analyst Lloyd Walmsley expects Google Sites revenue to come in at $19.39 billion, a 20% year-over-year increase excluding currency exchange, versus the FactSet consensus of $19.3 billion. He expects YouTube and mobile growth to drive the growth in Sites revenue. He’s also looking for strong revenue growth from the Other Google segment as Alphabet’s growing hardware line-up is supported by rising ad spend.

Big brands returned to YouTube during the third quarter after a spat earlier this year when some halted their spending on the platform because their ads appeared within extremist videos. He also notes that pricing was up in YT Preferred, so he thinks there could be upside even to his above-consensus estimate for Google Sites.

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Walmsley came away from his meetings during AdWeek bullish on Google for the second half of this year. His conversations revealed that the problems with YouTube during the second quarter “were more meaningful than we previously understood.” However, he feels that Alphabet has been taking the steeps needed to mitigate the problems around the YouTube brand and the brands of advertisers that run ads on it. YouTube revealed earlier this month that more than 83% of the extremist videos that were removed the month before were taken down before any person actually raised a flag on them.

Going into Alphabet Q3 2017 earnings tonight, Deutsche Bank has a Buy rating and $1,220 price target on the stock.

Third-party ad checks also look good for Google

Wedbush analyst Scott Devitt said in his Alphabet Q3 2017 earnings preview that data from third-party ad agency Kenshoo revealed steady growth in search spend during the quarter. The firm found currency-adjusted year-over-year growth greater than 10%, which he said is consistent with previous quarters’ growth rates this year.

Kenshoo reported greater than 32% year-over-year growth in clicks and a 16% decline in cost per click, which compere to the 22% growth in clicks and 10% decline in cost per click in the second quarter. The firm said ad inventory for shopping campaigns drove the overall click growth and continue to reduce cost per click. Mobile search spending grew 34%, a deceleration from the 45% picked up in the second quarter. Mobile contributed three out of every five ad clicks on searches and 44% of total search spend.

Wedbush has a Buy rating and $1,075 price target on Alphabet stock.

In the hours leading up to the Alphabet Q3 2017 earnings release, the company’s Class A shares ticked higher, surpassing the $1,000 mark briefly before reversing again. As of this writing, Alphabet stock is up 0.59% at $997.29.

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