Alphabet Bests Industry Performance: YouTube, Mobile Growth Keep Driving Wins

Following another robust quarter, Cantor Fitzgerald’s Youssef Squali believes YouTube, mobile search and programmatic have been key drivers of Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL)'s above-industry performance.

Squali maintains a Buy rating on the company, while raising the price target from $1,000 to $1,040.

Positive On Stock

“With mobile search and display still having a long runway ahead, a level of product innovation not seen in years and a cash-rich balance sheet, we believe Alphabet remains one of the key beneficiaries of growth in the digital economy,” the analyst mentioned.

Squali expressed positivity on the stock, given the company’s disciplined cost allocation across core Google and "other bets," along with sound capital allocation and attractive stock valuation.

Robust Quarter

Alphabet reported its revenue, adjusted EBITDA and NEPS ahead of the consensus expectations, with gross revenue growth of 23 percent year-on-year, consistent with Q1:16 and Q2:16, while operating expense efficiency led to impressive bottom-line results.

Similar to H1:16, “mobile search was the primary driver, as well as on-going strength from Youtube and important contributions from programmatic and Play,” Squali stated.

Key engagement metrics were also robust, with aggregate paid clicks growing 33 percent year-on-year and O&O rising a significant 42 percent year-on-year.

“Network remains challenged, with strength in programmatic/AdMob offset by traditional ad network businesses,” the analyst noted.

At last check, Alphabet was up roughly 2 percent on the day. GOOG shares were up 2.2 percent at $812.88, while GOOGL shares were up 2.37 percent at $836.75.

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