Here's what every major analyst had to say about Alphabet's fourth-quarter earnings report

Published Tue, Feb 4 20208:05 AM ESTUpdated Tue, Feb 4 20209:42 AM EST

(This story is for CNBC PRO subscribers only.) Alphabet unveiled greater transparency in its fourth-quarter earning report, but it wasn't enough to completely satisfy Wall Street analysts. The internet giant released its earnings results on Monday after the bell, beating earnings estimates, but missing revenue expectations, sending the stock lower. Shares of the company were down over 3% in early trading. Analysts were pleasantly surprised by the the new revenue disclosures surrounding YouTube, Search, and Google Cloud from new company CEO Sundar Pichai but remain concerned about the deceleration in U.S. growth. Profitability also continues to remain an issue according to analysts. Here's what else analysts are saying about Alphabet's earnings report: "While we love transparency, if we're being picky, we didn't get respective profitability metrics, which leaves us still challenged on solving for margin trajectory," Evercore ISI said. However, the firm said the slowdown in revenue is just too tough to ignore. "Enthusiasm for improved disclosure aside, the quarter's revenue result falls below where we had hoped, and similar to Facebook, US revenue demonstrated a marked deceleration," they said. In order for the stock to work, though, the company's results will have to be better, Citi said, noting it expected shares to trade lower. "The new YouTube disclosures will be applauded by investors. But, the 4Q19 financial results will likely determine the near-term trajectory of the stock," the firm said. "And, on this front, Alphabet posted mixed results." The advertising miss wasn't helpful according to JPMorgan, but the firm urged investors to remain calm and recognize the buying opportunity. "Overall, we understand the after-market pullback in GOOGL shares, particularly following outperformance over the past couple months," analyst Doug Anmuth said. "Street estimates may come down some near-term, but we continue to like Google shares," he said. Simply put, the quarterly results need to deliver in order for shares to continue their upward trajectory according to Bank of America. "Street was looking for, and got, more shareholder friendly disclosures and buybacks, but recent stock outperformance likely required a near perfect Q and there were both revenue and expense misses," they said. Another firm admitted the earnings report wasn't quite what Wall Street has come to expect from Alphabet but was willing to take the good with the bad for now. "Overall, we were hoping for a bit more on the topline, but in terms of viewing multiple ways to win from the change in management, we think this quarter checked off a number of critical boxes – increased capital return and new disclosure," Pivotal Research said. Goldman Sachs- Buy rating, pt to $1600 from $1500 "New disclosures were announced for Search, YouTube and Google Cloud, which while hoped for, were not expected in the quarter. While some might focus on a deceleration in US growth to 16% from 21%, we note that management called out weakness in North American hardware revenue. We see the new disclosure as in sync with our view that Google Cloud Platform is becoming a stronger competitor in the Cloud, and see disclosure relating to Search and YouTube as in line with expectations." Wells Fargo- Overweight rating "While we would still like to have a better understanding of segment profitability, we view the disclosures offered alongside 4Q results as a significant step forward for a company we have long viewed as the most reticent in our coverage group (and likely among the most reticent across the broader U.S. stock market). Exiting the quarter, we lower our 2020 revenue/EBITDA forecasts by 1%/3%, but maintain our Overweight rating and $1650 price target as we view incremental transparency/predictability as a multiple driver for GOOGL shares." Citi- Buy rating "The new YouTube disclosures will be applauded by investors. But, the 4Q19 financial results will likely determine the near-term trajectory of the stock. And, on this front, Alphabet posted mixed results. Revenues came in a touch below buy-side expectations. As such, we expect the stock to trade down tomorrow. But, nothing in these results was thesis changing. We continue to recommend Alphabet as our favorite large cap Internet stock. We remain Buy rated with a $1,500 target price." Piper Sandler- Overweight rating, pt to $1,600 from $1,500 "Advertising spend continues to shift online and Alphabet (along with Facebook and others) remains positioned to be a primary beneficiary of this transition. In 2019, approximately half of global ad dollars were spent online and this is expected to grow ~60% within the next three to four years. In absolute dollars, we expect online ad spend will rise from approximately $300B today to the $500B range by 2022 or 2023." Evercore ISI- Outperform rating "The biggest surprise in the GOOGL 4Q was a flood of new disclosure. For the first time, we have revenue totals for both YouTube and Cloud. Since the relative scale and growth rates of these businesses are fairly close to both our prior estimates and investor expectations, it won't likely provide a material change to growth outlooks. While we love transparency, if we're being picky, we didn't get respective profitability metrics, which leaves us still challenged on solving for margin trajectory. Enthusiasm for improved disclosure aside, the quarter's revenue result falls below where we had hoped, and similar to FB, US revenue demonstrated a marked deceleration. While we suspect the explanation for the slowdown is substantially a function of the shorter holiday season, management wouldn't quantify, leaving investors without much certainty for near-term reacceleration." Barclays- Overweight rating, pt to $1,635 from $1,625 "Google reported revenue and OI that were 2% and 5% below consensus and the tone of the call was upbeat. New disclosures around Search, YT and Cloud help provide additional visibility into key trends which we view positively. In terms of the 2020 outlook, revenue looks to decelerate after 1Q's uptick, and management guided to accelerating headcount growth in 2020 which likely means margins contract. Shares were over-bought heading into the print so may chop around a bit near term, but similar to prior situations where GOOGL tanks right before senior equity refresh, we would accumulate on weakness." JPMorgan- Overweight rating "Overall, we understand the after-market pullback in GOOGL shares, particularly following outperformance over the past couple months. But we believe the advertising miss was modest & we are less concerned about the HW shortfall, particularly as the Street assigns little value to that business anyway. We like the increased disclosures on Cloud & YouTube, along w/more concrete commitments on buybacks. Street estimates may come down some near-term, but we continue to like Google shares." Morgan Stanley- Overweight rating "GOOGL's new segment disclosure gives us better insight into the company's main growth drivers, but, at a high level, the thesis is the same…GOOGL's ability to innovate and drive engagement and monetization across its 9 products with 1bn+ users -- while exercising discipline and capital returns -- are key to driving long-term shareholder value." Deutsche Bank- Buy rating, pt to $1,700 from $1,735 "We would add to Google positions on the after-hours pull-back given we feel better, structurally, about the business, commentary on the revenue outlook was encouraging and cost estimates should get reset on the quarter. Google Sites ex-FX growth of 20.1%, a hair shy of consensus, but strong overall, particularly in light of concerns coming out of Facebook and Bing's decelerations. ... The disclosure - directly in terms of segment report and with helpful commentary on the call - combined with a 130% y/y increase in share buyback with a commitment to maintain these levels or more speaks to a sea change in shareholder-friendly posturing, which should help drive the multiple higher." Credit Suisse- Outperform rating "Our price target remains at $1700 and we maintain our Outperform rating and our investment thesis remains based on the following factors: 1) ongoing monetization improvements in Search advertising through product/AI-driven updates, 2) greater-than-expected revenue contribution from non-Search businesses (YouTube, Cloud, and Play), 3) optionality and shareholder value creation from new monetization initiatives such as Maps, Discover tab, as well as the eventual commercialization of Google's Other Bets (Waymo, life sciences)." RBC- Outperform rating, pt to $1550 from $1,500 "Aggressive share repos, potential Core Google margin stabilization, increased disclosure, and very consistent -- tho arguably modestly fading -- revenue growth are great drivers of GOOGL's EPS Growth Algorithm and stock price. We believe one remaining factor would be greater discipline over Other Bets losses. That would help produce a re-rating. In the meantime, you have a respectable Compounder. 20%+ Revenue Growth for 10 straight years at this scale is extraordinarily impressive." Raymond James- Outperform rating, pt to $1,580 from $1,475 "Alphabet reported mixed 4Q results with total FX-neutral revenue growth of 19% driven by Google Properties growth of 18% y/y offset by weaker hardware revenues. Also, Alphabet reported lower operating income (largely due to higher legal costs). Alphabet also for the first time disclosed revenue for YouTube ($15B for 2019, 36% y/y) and will also break out cloud going forward." Bank of America- Buy rating "Street was looking for, and got, more shareholder friendly disclosures and buybacks, but recent stock outperformance likely required a near perfect Q and there were both revenue and expense misses (ad revenue growth decelerated & missed). ... On the call, Google was more proactive with financial outlook commentary, indicating optimism on ad revenue opportunities and Cloud, but also signaling an investment posture in 2020 with higher headcount growth, investment in cloud and YouTube, and growth in capex." UBS- Buy rating "Across the board, GOOG presented a very solid Q4'19 earnings report with above modeled advertising revs and upside surprises on both core operating margins and capital returns presenting a positive check-in against the long-term drivers (while short-term heightened investor expectations might cause stock price digestion). As with almost every GOOG earnings release, there were nuances that can cause debate but overall we come away from the report convicted in our thesis on the collection of operating businesses and long-term upside optionality." Pivotal Research- Buy rating "GOOGL reported a slightly weaker revenue quarter vs our/Street expectations, though based on management commentary, US results appear to have been weighed down by a challenging hardware comp in 4Q18, which we view as largely irrelevant to the story. On a far more positive note, as we had hoped (and earlier than we expected), the company provided incremental segment revenue disclosure – specifically around GOOG search, YouTube and Cloud. ... Overall, we were hoping for a bit more on the topline, but in terms of viewing multiple ways to win from the change in management, we think this quarter checked off a number of critical boxes – increased capital return and new disclosure." Susquehanna- Positive rating "We remain positive on the secular ad growth story driven by mobile search and YouTube combined with generally better expense management and a more shareholder-friendly capital allocation approach. The new revenue disclosures were great to see…and while they make comparisons to expectations difficult for 4Q, we believe trends were largely in-line across the key areas of the business—search, YouTube, Cloud. As we noted in our preview, expectations were elevated given the recent stock outperformance and thus we aren't surprised by the pullback. We would use any weakness in shares as a buying opportunity."

Google CEO Sundar Pichai

Chesnot | Getty Images

(This story is for CNBC PRO subscribers only.)

Alphabet unveiled greater transparency in its fourth-quarter earning report, but it wasn't enough to completely satisfy Wall Street analysts. The internet giant released its earnings results on Monday after the bell, beating earnings estimates, but missing revenue expectations, sending the stock lower.

Shares of the company were down over 3% in early trading.

Analysts were pleasantly surprised by the the new revenue disclosures surrounding YouTube, Search, and Google Cloud from new company CEO Sundar Pichai but remain concerned about the deceleration in U.S. growth. Profitability also continues to remain an issue according to analysts.

Here's what else analysts are saying about Alphabet's earnings report: