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Andreas in Gainers & Losers,

Investment idea - Alphabet

Black Friday, the busiest time for online retailers, is coming. Alphabet (GOOGL) will become a beneficiary of the consumer boom along with The company demonstrates double-digit growth. According to the recently released financial report for 3Q15, consolidated revenue increased 13.0% y-o-y to USD 18.68 bn, outpacing the consensus by 1%. Google’s advertising revenues, rising 16.0% y-o-y to USD 13.1 bn, turned into a revenue growth driver. Taking into account devaluation effects, revenue jumped 21% y-o-y. Adjusted operating profit was up 14.6% y-o-y to USD 6.14 bn, while operating margin spiked 32.9% vs. 32.4% a year ago. Adjusted EPS soared 17.6% to USD 7.35, outpacing expectations by 2%. The company generated free cash flow of USD 3.63 bn, and as a result, net cash position (including marketable securities on the balance sheet) rose to USD 72.77 bn (+17% y-o-y). A significant cash position allowed the company to start a buyback program. The Board of Directors announced a share buyback program totaling USD 5.1 bn for the first time in the company’s history.

Like Facebook, Alphabet continues to monetize its services. Alphabet recently announced a new paid service YouTube Red, which is analogous to Netflix and may even compete with the later.

I believe that Alphabet will succeed in monetizing its services, and this trend, coupled with buyback program, will boost the medium-term share price performance of Alphabet (GOOGL).

I raised my target price for Alphabet (GOOGL) shares to USD 800 and believe that the name provides an attractive mid-term investment opportunity. The short-term technical target is USD 770.