Alphabet (GOOGL) – Get Report shares rose Friday after Credit Suisse analysts raised their price target on its Google parent company ahead of next week’s second-quarter earnings based on innovation lead gains in its critical advertising business.
Credit Suisse analyst Stephen Ju, who has an outperform rating for the stock, raised its price target by 21.5% to $3,350 a share, citing the impact of new product launches that will expand the group’s total addressable advertising market to approximately $3 trillion of both larger and small to medium-sized businesses with real-time inventories that can be linked to the search and mapping facilities.
Credit Suisse sees 41% revenue growth for YouTube in 2021 and 30% for the entire Google ad business. However, the cost of acquiring traffic is likely to be higher, given the expansion of Alphabet’s data center and improved payments to YouTube content providers.
“Given Google’s global presence, it’s worth noting that nearly all advertising sectors are on track to exceed our expectations for the quarter. And while the overall advertising budget recovery has boosted recent results, we’re looking at the more important product-driven and sustainable contributors to ad volume and price growth for 2H21 and beyond,” said Ju.
“As a logical continuation of the first step towards built-in incremental store/ecommerce inventory with the release of the free listing tranche for Shopping, Google is now following the ability to more easily scan in-store products that then automatically appear in the Business Profile section of Search and Maps,” he added. “By simplifying offline cataloging, users now have access to real-time inventory information that should help drive conversion and thus incremental ad dollars over time.”
Shares of Alphabet were up 1.3% in early trading Friday to switch hands at $2,601.63 apiece.
Alphabet will report its second-quarter results after close of trading on Tuesday, July 27, with analysts looking for revenue of $51.156 billion and earnings of $19.34 per share, up 91% from the year before. the same period last year.