Alphabet, Inc. | $GOOGL Stock | Ready to Run?


Alphabet, Inc. (NASDAQ: GOOGL)




As of late, GOOGL has been trading in a relatively tight range over the past 2 months as it has consolidated along the lower support of the wedge it has formed. As the ranges get tighter, more consolidation takes, and it approaches the apex point of the wedge, it could be primed for a strong move higher into the second half of the year.


Analyst Expectations

Analysts at Bank of America Merrill Lynch put out an update earlier in today’s session on GOOGL.


Raising estimates on YouTube – Likely crossing $10bn revenue mark in 2016  We estimate $12bn in revs in 16, growing to $20bn by ’18 Google does not disclose revenues, but indicated in 2015 that partner revenue was up 50% over last 3 years. Based on Online video ad market growth driven by new content, faster Internet speeds, and increasing mobile usage, we are raising our 16 YouTube gross revenue est. to $12.0bn (vs. $10.4bn in last report), and estimate $20.4bn by 18. We also estimate 57% incremental gross and 18% incremental operating margins in 15. Comps suggest a stand-alone valuation potential at $90bn We remain bullish on Alphabet as YouTube provides exposure to the rapidly growing Online video market. Assuming a 5.7x revenue multiple (in-line with FB, LNKD, TWTR) on 2017, we get to a $90bn valuation. Using social user and usage valuation comps, we could get much higher, but without disclosure these comp multiples are less relevant. Upside case Alphabet math: Backing out our YouTube value, gross Cash and other bets losses (and ignoring SBC), we estimate the 2017 GOOG P/E falls from 18.3x to 11.7x. Comps suggest a stand-alone valuation potential at $90bn .


About Alphabet, Inc.

Alphabet Inc., incorporated on July 23, 2015, is a holding company. The Company holds interests in Google Inc. (Google). The Company’s segments include Google and Other Bets. Google segment includes Internet products, such as Search, Ads, Commerce, Maps, YouTube, Apps, Cloud, Android, Chrome, Google Play, and hardware products, including Chromecast, Chromebooks and Nexus, which are sold by the Company. Its technical infrastructure and Virtual Reality are also included in Google segment. Google segment is engaged in advertising, sales of digital content, applications and cloud services, as well as sale of Google branded hardware. The Other Bets segment consists of various operating segments and includes businesses, such as Access/Google Fiber, Calico, Nest, Verily, GV, Google Capital, X and other initiatives. Other Bets segment is engaged in the sale of Nest hardware products, Internet and television services through Google Fiber, and licensing and research and development (R&D) services through Verily. Google offers products, including Gmail, which is an e-mail service; Chrome, which is a browser, and Google Play, which allows access to movies, books, music and application on various devices. Google offers platforms, including Chrome OS and Android mobile operating system. – Reuters