Alphabet: analysts cite lack of revenue growth and transparency

"We believe that equities are valued at fair value at current levels and believe that the multiple will remain tied in the range over the next twelve months, as a period of potential digestion is expected, with less visibility into the rates of interest. 1T would be an encouraging trend, all other things being equal, although the deceleration trajectory of the hierarchy and issues related to the long-term growth trajectory of Alphabet incomes are probably more meaningful for medium-term equity performance in our view, while discretionary spending could also result in lower opex GOOGL stock prices are trading at about 22 times our EPS 2020E, matching the three-year historical average 22x EPS anticipated over two years. "

"Despite the improvement in GAAP EPS based on the EU's financial performance, Alphabet's shares will likely be under pressure, as revenue growth for sites in constant currencies has been lower. at 20% for the first time since the first quarter 15. A larger currency factor was clearly a major reason Due to the shortfall, management indicated that the timing of changes to advertising products was another factor that in some quarters, was referred to as tailwind, but this quarter was seen as a hindrance to revenue growth. "

"Google missed every 1.5% to 4% business line for the first quarter, and we were under consensus.We have to imagine that part of the deceleration is deliberate because of product changes, and another is the reset of Google by the bar.The network trends are likely to happen worse, while Yahoo and AOL give up AFS. "

"Overall, we expect GOOGL's shares to be under pressure in the near term, given the growth in revenue and the downward revision of earnings of less than 20%. As indicated above, the factors determining the slowdown of GOOGL's top line are unclear, however, GOOGL has maintained for a very long time a growth of over 20% – on a significant basis – and now represents About one third of the global online advertising market.It is also facing increased advertising competition from AMZN, Our earnings per share and our 2019/2020 GAAP have all decreased by about 2% , the improvement in other betting losses partially offsets the slower growth in the Google segment, and we are maintaining our overweight rating, but prefer the other FANG Facebook, Amazon and Netflix names to Google. "

"This quarter will undoubtedly result in a reset of expectations, especially for the ad sector, as investors are looking for reasons for a fairly significant deceleration – we expect equities to trade sideways as we trade. ask if this quarter was simply a result.We are on the side of the first and keep our note of purchase, although calls for further disclosure to help us resolve these issues again constitute a main theme, and for good reason, slightly lowered our forecasts and our price target increases to $ 1,300 ".

"The turnover of GOOGL's 1Q ex FX websites was 1% lower than our estimate … up 19% year-on-year, GOOGL's first growth of less than 20% over 17 quarters." (T3: 14) GOOGL indicated that "the timing of product changes in ads" as one of the factors leading to the deceleration of growth … but has not further clarified the nature of changes, whether the impact is linear or quarterly, or that other changes are coming in. The fact is that we are not sure of the changes made by GOOGL during the quarter that led to the slowdown and Street, but EBIT, EBITDA and the CLF have all been stronger than expected, but the future growth trajectory of Web site sales (given the magnitude of and the leverage effect of this annualized activity of around 10 $ 0 billion) should remain the primary concern in determining long-term valuation. "

"We are modest buyers of the 7% withdrawal in the morning, we are important buyers of a large withdrawal.We do not believe that GOOGL is experiencing a significant and sustained slowdown in its growth. 1T $ in global advertising / marketing spend 2) Our extensive survey found that Google's marketers have not changed their minds – budget allocations, future spending intentions or return on (3) We believe that GOOGL Investments in the Cloud, Internet-connected homes and autonomous vehicles allow the company to prepare for new years of earnings and earnings growth. the valuation remains reasonable, in our opinion, at ~ 20x Core Google's 19E GAAP EPS, adjusted for cash flow.

"Revenues decelerated more than expected, as several peers exceeded expectations (although FB ad growth slowed by 220bp t / t, much like Google Ads) and we expected Google shares give up some of the recent gains (the stock jumped $ 1,200 in early April, up 4% from the S & P index.) If more robust products could continue to have an impact on advertising revenues for 2019, Google could also make improvements that could accelerate these revenues, better stock volatility with better information), we continue to be optimistic about the mid-term benefits of automatic learning about ad targeting, the revenue potential of new investments (Google Cloud and Waymo), and Google's relatively undeveloped valuation – we maintain our purchase rating. Alysers here include: 1) new products (hardware) from Google I / O on May 7, 2) YouTube news in advance and 3) visibility on Google Cloud or Waymo. "

"We are aware that quarterly results may be volatile and that we recognize the company's long-term objective, but the magnitude of the deceleration in constant currencies has represented the largest sequential decline since 3Q12. Given the magnitude of the change, especially because of the consistency We believe that Google does not explain the slowdown in the growth rate, while the CFO pointed out the uncertainty regarding the timing of the last quarter, but the comments were so opaque that they seemed meaningless for most investors, instead of warning that revenue growth would increase, in addition to the sharp deceleration, with gross advertising revenue approaching $ 154 billion at Google in 2020 , combined forecasts of 237 billion USD of Google + Face-book in 2020 should reach 40% of the global advertising market according to our In view of the slowdown in growth and the increasing penetration, fears of saturation on Alphabet manifested themselves: we reduce the total turnover of our non-exchange sites in 2019 to 18% (against 20.7%) and our price target of $ 1,300 (previously $ 1,385), reflecting lower estimates and slightly lower multiples. "

"After a call for Q4 results announcing potential product shifts, the GOOG First Quarter Results Report for 19 reflected this message (our cautious modeling was not enough) and the ad / US slowdowns. in Europe were lower than expected (our first catch is this trend is determined by the supply / number of clicks versus demand) .Mgmt has formulated stringent conditions for the coming years (we think that referencing the strength of YouTube products compared to a year ago is an obstacle to volumes) and pointed out that no product change had caused such a drawback.We strive to properly control the wind On the other hand, leaving aside the short-term debate (like a surplus of stocks), we still see GOOG as a key long-term position and nothing in this quarter changes our v ision of the structural factors of revenue growth and FCF generation (AI / machine learning, local advertising, media consumption, cloud computing, hardware and other bets) – in particular what we consider to be a reasonable absolute valuation in relation to growth ".