Alphabet's Solid Q2 Aided By 'Substantial' Growth In Mobile

Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL)'s earnings report on Monday consisted of another quarter of sustained underlying momentum and strength across the world, according to analysts at Cantor Fitzgerald. The firm's Kip Paulson maintains an Overweight rating on Alphabet's stock with a price target boosted from $1,070 to $1,100.

'Solid Quarter'

Alphabet's gross revenue came in 1.5 percent ahead of the Street's estimate while EBITDA was 4.1 percent better than expected, Paulson continued (see his track record here). Also, gross revenue grew 23.0 percent (excluding foreign exchange) in the quarter, which was consistent with the 24 percent growth seen in the first quarter.

Meanwhile, mobile search was the "primary driver" in the earnings report and was assisted by the ongoing strength in YouTube — as has been the case in the past few quarters, the analyst added. As a whole, total clicks rose 52 percent year over year, which was partially offset by a 23 percent decrease in cost-per-clock.

Revenue coming from Google's websites rose 20 percent year-over-year to $18.425 billion and was also driven by strength in mobile search and YouTube. The company also showed "substantial growth" in the often overlooked categories, including Cloud, Play, and hardware.

Bottom line, Alphabet's report merely reaffirmed the analyst's bullish thesis, including:

1. A "healthy" double-digit growth.
2. Attractive free cash flows.
3. Strong EBITDA margins despite higher TAC and investments.
4. A disciplined approach to capital allocation.
5. A "compelling" valuation at 13.3x EV/EBITDA.

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