Skip to content
Alpha Edge Investing

Alpha Edge Investing

"Investors operate with limited funds and limited intelligence, they don’t need to know everything. As long as they understand better than others, they have an edge.” – George Soros

  • Home
  • Earnings Updates/ Corporate Actions
  • Research – Equities
  • Research – Fixed Income/ Bonds
  • Research – Unit Trust/ ETF
  • News
  • My Opinions/ Views
  • Others
  • About Me
  • Contact
  • Disclaimer
  • Community and Support Forums
  • Toggle search form

DBS: Alphabet – Buy target Price US$126.00

Posted on November 7, 2022November 7, 2022 By alanyeo No Comments on DBS: Alphabet – Buy target Price US$126.00
3Q22 EPS miss consensus estimates by 15%
  • 3Q22 revenue of US$69bn (+6.1% y-o-y) largely driven by the 38% y-o-y growth in cloud business, was 2% below consensus
  • GOOGL’s 3Q22 EPS of US$1.06 (-27% y-o-y), 15% lower than consensus
  • GOOGL’s Cloud Platform (GCP) margin loss narrowed from -14% to -10% q-o-q in 3Q22

GOOGL topline missed street estimates by 2% with a slower growth of 6% y-o-y. GOOGL reported its fifth consecutive quarter of slowing sales growth of just 6% y-o-y reaching US$69bn in 3Q22, also 2% below consensus estimates. Management highlighted the drop is due to continued downdraft in online ad spending specially in areas such as insurance, loans, mortgage and cryptocurrencies. GOOGL’s search ad sales grew 4% y-o-y to US$39.5bn while YouTube ad revenue dropped 2% y-o-y to US$7.07bn. Overall advertising revenue reached US$54.48bn in 3Q22, up 2.5% y-o-y. Facing increasing competition from TikTok, YouTube in September placed ads in its quick-video competitor, Shorts, in an effort to bolster revenue.

GOOGL’s Cloud Platform (GCP) margins loss narrowed from -14% to -10% q-o-q. During 3Q22 GOOGL’s Cloud Platform (GCP) grew 38% y-o-y in revenue reporting US$6.9bn while operating losses widened 9% y-o-y to US$699mn. Operating margins have narrowed from -14% to -10% q-o-q which indicates the path to breakeven. GCP accounts merely 10% of the global cloud infrastructure market while AWS and Azure holding 32% and 21% with operating margins of 30% and 45%. We believe there is tremendous possibility for margin improvement for GCP in upcoming quarters.

GOOGL earnings were down 27% y-o-y amounting to US$13.9bn during 3Q22. EPS amounted to US$1.06 which is 15% lesser than consensus estimates of US$ 1.25 for 3Q22. Drop in earnings in 3Q22 was due to 17.9% increase in cost and expenses mainly from R&D (33.5% y-o-y) and S&M (25.6%). Management enacted some cost-cutting measures across the company such as cutting the headcount growth by half in 4Q, cancelling the next generation of its Pixelbook laptop, cut funding to its Area 120 in-house incubator, shuttering its digital gaming service Stadia, citing economic challenges, including a potential recession, soaring inflation, rising interest rates and tempered ad spending.

BUY GOOGL with a target price (TP) of US$126, based on a P/E of 24.0x

Share this:

  • Click to share on Twitter (Opens in new window)
  • Click to share on Facebook (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to share on Telegram (Opens in new window)
  • Click to share on WhatsApp (Opens in new window)
Research - Equities Tags:Alphabet Inc, Google

Post navigation

Previous Post: DBS: OUE Commercial REIT – Hold Target Price $0.35
Next Post: DBS: Mastercard Inc – Buy Target Price US$405.00

Related Posts

PhillipCapital: FAANGM Monthly Research - Equities
PhillipCapital: FAANGM Monthly July 22 Research - Equities
PhillipCapital: Alphabet Inc – Buy Target Price US$139.00 Research - Equities
Alphabet earnings miss estimates, ad revenue beats, stock pops Earnings Updates/ Corporate Actions
Bloomberg: Apple to Slow Hiring and Spending for Some Teams Next Year News
Bloomberg: Google, Meta Bow to Sweeping Taxes, Content Curbs in Indonesia News
PhillipCapital: FAANGM Monthly – June 22 Attractive despite recession fears Research - Equities
Investing in a Stock Market Crisis – A U-shaped Recovery My Opinions/ Views
Japan set to fine Twitter, Meta, Google if they neglect domestic registry -Nikkei News
The Bear Market Has Finally Arrived. Here’s How to Move On and Act Now News
PhillipCapital: FAANGM Monthly – May 22 Still attractive despite economic uncertainty Research - Equities
Nansen turns to Google Cloud to empower Web3 investors with real-time market intelligence News

Leave a Reply

You must be logged in to post a comment.

Login

Log In
Register Lost Password
Get new posts by email
Chat on WhatsApp
  • Earnings Updates/ Corporate Actions
  • My Opinions/ Views
  • News
  • Others
  • Research – Equities
  • Research – Fixed Income/ Bonds
  • Research – Unit Trusts/ ETF

Copyright © 2023 Alpha Edge Investing.

Powered by PressBook Grid Blogs theme