- Reuters/Eddie Keogh
That earnings number beat analysts’ expectations for $7.21 per share.
The company also announced that it will undertake a monster $5 billion stock buyback starting in the fourth quarter.
And all of that sent shares up soaring 11% in after-hours trading.
Wall Street analysts covering Google, which is now called Alphabet, are loving the news. Out of the 14 research notes read by Business Insider, all 14 had a “buy” or “outperform” or “overweight” ratings on the stock.
No one’s saying to sell.
Here’s some of what the pros are saying.
Deutsche Bank: BULLISH
Price Target: $900
Comment: “We’ve stated repeatedly that management changes (Page 2011, Pichai 2014/15, etc) have historically been a positive catalyst for re-invigorated growth and energy at Google, and the ascendancy of Sundar Pichai over the past 18 months is starting to pay major dividends. Not only is the entire business inflecting higher in terms of growth rates, but management appears eager to drive the share price higher in order to ensure retention and motivation. ”
Price Target: $900
Comment: “Alphabet beat and we believe the road ahead looks bright. 4Q results will come with added disclosures from the Alphabet reorganization, with core Google businesses reported on a combined stand-alone basis and more speculative (likely money-losing) moonshots reported separately. Alphabet also announced the company’s first-ever share-repurchase authorization of up to $5B of class-C shares. Beyond the 4Q catalyst, we believe app-install ads and Customer Match will drive further growth and that more broadly, Alphabet will continue to successfully navigate the mobile transition.”
Price Target: $800 to $900
Comment: “Icing on the cake: Google announced a $5.1B buyback. Google remains a Franchise Pick; Reiterate Buy.”
RBC Capital Markets: BULLISH
Price Target: $880
Comment: “The Market has wanted four things from GOOGL – Consistent Revenue growth, margin stabilization, greater disclosure & cash back. What the market wants, the market gets (well, at least this time) … Stepping back, Alphabet still remains arguably the best portfolio play on the biggest Internet trends – the Mobile/Multi-Screen shift, the migration of TV ad budgets Online, the growing importance of Local Internet, wearable devices, the Internet of Things, etc… And Alphabet’s share price still doesn’t reflect this.”
Price Target: $875
Comment: “Just as NY Mets fans have waited 15 years for their team to reach the World Series, longtime Alphabet shareholders can now similarly rejoice, as their wait is also over. After many years of being asked ‘when,’ Alphabet’s board has authorized the company to buy back stock for the first time; we believe this will drive the stock higher, as investors acknowledge Alphabet’s discipline for capital allocation. To boot, Alphabet’s results were extremely strong, with Google Sites growth accelerating and ahead of expectations, driven by strength in mobile search, complemented by strength in YouTube revenue and programmatic advertising.”
B. Riley: BULLISH
Price Target: $853
Comment: “We saw another Q of product momentum (mobile search, programmatic, YouTube), cost management and returns to SH. With increased visibility into the company’s financials available next Q, we do expect GOOGL to benefit from estimate increases and multiple expansion.”
Goldman Sachs: BULLISH
Price Target: $850
Comment: “In our view, the buyback announcement came sooner than expected, just five months after new CFO Porat came into her seat. Finally, we are encouraged by the announcement that Alphabet will be including capex (in addition to revenue and profitability) with its segment reporting for its Google and ‘Other Bets’ segments going forward, a testament to management’s commitment to better transparency.”
Pacific Crest: BULLISH
Price Target: $820
Comment: “Alphabet posted a good Q3, extending the improved fundamentals seen in Q2. However, the announcement of a share repurchase, after already getting increased disclosure and more rational spending, completes the shareholder triple play.”
Morgan Stanley: BULLISH
Price Target: $820
Comment: “We remain bullish on GOOGL as 3Q:15 results spoke to the: 1) Momentum in the core business, 2) Increased transparency to come from the Alphabet non-core disclosure, and 3) Beginnings of shareholder capital returns.”
Raymond James: BULLISH
Price Target: $790
Comment: “While we believe Google could accelerate investments in non-core areas in 2016, improved transparency after next quarter should alleviate this concern.”
Price Target: $780
Comment: “Alphabet remains a top pick with what we believe are continuing favorable industry trends and stabilizing margins. Maintain Outperform rating.”
Macquerie Research: BULLISH
Price Target: $770
Comment: “Additionally, the business fundamentals seem to indicate that concerns about core search may be exaggerated. The company highlighted mobile search as a key strength in the qtr (along with YouTube and programmatic). With new disclosures coming in 4Q that will allow investors to better value core Google versus its other ‘bets’, we see the potential for share to appreciate and see limited downside in the near term.”
Bank of America Merrill Lynch: BULLISH
Price Target: $750
Comment: “In summary, we see 3Q as a solid quarter for revenues and mobile search, while buybacks could go a long way toward improving sentiment. Negative is that the very positive margin trends in 2Q reversed in 3Q (non-GAAP margins down 90bps q/q), and Google cautioned on higher capex spending for non-Google businesses on the call.”
SunTrust Robinson Humphrey: BULLISH
Price Target: N/A
Comment: No comment.
And now… check out what analysts are saying about Amazon.
- Flickr/Jason Walsh