Buy The Dip In Alphabet Shares? Analyst Still Sees His Bullish Theses Intact After Q2 Earning Report

Alphabet Inc GOOG GOOGL shares were crushed during Monday’s after-hour trading session as the $2.7 billion European Commission fine was too much for the company to overcome.

However, Credit Suisse analyst Stephen Ju still sees his bullish theses intact; he maintains his Outperform rating but lowered his price target from $1,150 to $1,100.

Looking At Alphabet’s Q2 Metrics

• Sales: $26 billion (above estimates by $400 million).
• Net revenue: $20.9 billion versus $20.9 consensus.
• EPS: $10.11 versus $10.03 consensus.
• Traffic Acquisition Costs: $5.091 billion.
• Diluted EPS (including the fine): $5.01.

"With revenues of $26 billion, up 21% versus the second quarter of 2016 and 23% on a constant currency basis, we're delivering strong growth with great underlying momentum, while continuing to make focused investments in new revenue streams," said Ruth Porat, chief financial officer of Alphabet.

European Commission Fine Does Not Impact Ju’s Thesis

Ju highlighted how Alphabet continues to blow by growth rates above 20 percent, with Q2 growth reported to be 23 percent. According to Ju, this growth is catalyzed by “ongoing strength in mobile search, YouTube, as well as its non-search businesses such as Play and GCP.”

3 Reasons To Still Be Bullish On Alphabet

• 1. Alphabet is starting to see monetization improvements in Search through product updates.
  2. Alphabet is receiving a larger-than-expected contribution from Google’s larger non-search business.
  3. “Optionality for value creation from new monetization initiatives such as Maps as well as the eventual commercialization of Google's Other Bets (Waymo),” Ju said.

Shares of Alphabet were down nearly 3 percent at $970 during Tuesday’s pre-market session. To take a deeper look into Google’s earning metrics and read the latest news, check out Benzinga Pro.