(This story is for CNBC PRO subscribers only.) Wall Street analysts are telling clients to proceed with caution ahead of Alphabet's first-quarter earnings report on Tuesday after the bell. Despite the company's wide variety of businesses that include cloud, search, and YouTube, it's digital advertising that has analysts and investors on edge as the coronavirus pandemic has left no part of the market untouched. Many analysts remain concerned about the internet giant's revenue as ad spending has been dramatically reduced due to the crisis. The internet giant is up just over 9% this month but that's still less than the other so-called FAANG stocks, which also include Facebook, Amazon, Netflix, and Apple. Here's what Alphabet analysts expect from the company's earnings report: "We expect near-term economic impacts from COVID-19 to result in lower overall advertising industry revenue, with Alphabet's primary businesses, Search & YouTube, having particular exposure to the travel, media & entertainment, retail, finance, and, automotive verticals," Stifel said. The firm added that near-term visibility "remains low" but that it still saw plenty of upside for the stock over a longer time horizon. "We maintain our Buy rating on GOOGL shares with a more positive longer-term view." The feeling was similar at investment firm SunTrust. ""We remain positive on GOOGL even as we head into 1Q20 earnings, which are likely to reflect the negative effects of covid-19 on the company and its short-term outlook," the firm said. Another firm said Alphabet investors will eventually be rewarded for their patience as consumers move further away from offline and onto online. "For those with a longer horizon, we would be opportunistic buyers as GOOGL remains well-positioned to monetize secular shifts to online content and commerce," Jefferies said. But according to Evercore ISI, ad trends may not actually be as bad as investors fear. "We take the view that advertising on Google search is far less cyclical as a function of the broader ad market than many suspect and that accelerative trends in e-commerce retail are providing greater support than the Street anticipates." In the end, Alphabet has other streams of revenue that should help it get past the coronavirus crisis and emerge stronger Goldman Sachs said. "All in, we continue to view Alphabet as one of the best-positioned digital ad companies and expect digital advertising revenue to reaccelerate in 2021 once the industry recovers from the COVID-19 impact." RBC - Outperform rating "Based on intra-quarter data points and our analysis, we believe Street estimates for Q1 are likely optimistic, given the material pullback in ad spend due to COVID-19. Management commentary on near-term Ad Revenue outlook will be key: we project down -20%+ Y/Y in Q2." Stifel - Buy rating "We overall are cautious on near-term results and company commentary. Visibility remains low in our view on the impact and duration of the current environment on Alphabet's key businesses, including Search, YouTube, Hardware, and Cloud. ... .To reiterate our current view, we expect near-term economic impacts from COVID-19 to result in lower overall advertising industry revenue, with Alphabet's primary businesses, Search & YouTube, having particular exposure to the travel, media & entertainment, retail, finance, and, automotive verticals. Alphabet's other businesses including hardware, app revenue, and subscriptions are likely to see negative impacts as well." SunTrust - Buy rating " We remain positive on GOOGL even as we head into 1Q20 earnings, which are likely to reflect the negative effects of covid-19 on the company and its ST outlook. Conversations with marketers suggest Jan/Feb were strong but March was softer, which prompted us to lower our ests on 3/26 ( link ) below consensus to reflect weaker ad demand across most verticals. While visibility into the recovery remains murky, we believe Alphabet is well-positioned to re-emerge in a stronger position given Google and YT's status as must-buy platforms for advertisers due to their effectiveness, scale and BS." Canaccord - Buy rating "While we expect Google to see a benefit to engagement across its properties, particularly YouTube, due to shelter-in-place restrictions, we forecast a deceleration of advertising revenue growth in Q1 as economic weakness caused by COVID-19 likely impacted ad budgets, especially in the travel vertical and for small businesses. However, we anticipate that heightened demand for Google Cloud during the pandemic could drive an acceleration of y/y Other revenue growth during the quarter." Wedbush - Outperform rating "We believe that an OUTPERFORM rating is warranted given valuation upside and an unrivalled collection of high-profile and omnipresent core products and platforms. ... .While we expect a market share shift to digital advertising, overall ad spending will mirror the likely contraction in the economy caused by the pandemic, and we expect Alphabet to suffer from slower growth for the balance of the year." Mizuho - Buy rating "We believe the stock will likely be under pressure in the NT due to negative Street revisions and would be buyers on any weakness post the quarter. Our long-term thesis remains unchanged as we continue to believe that Google is a positive structural story on penetrating TV advertising, improved monetization for Maps and newly introduced Discover ads, and cloud opportunities." Goldman Sachs - Buy rating "All in, we continue to view Alphabet as one of the best-positioned digital ad companies and expect digital advertising revenue to reaccelerate in 2021 once the industry recovers from the COVID-19 impact. Additionally, we see non-advertising revenue streams like Google Cloud becoming a more central part of the thesis over time. ... .While it may not be fully reflected in consensus, we believe the market expects a significant growth rate deceleration in 1Q, as key Google advertising end-markets such as travel & leisure, media & entertainment, pockets of retail and small businesses across industries come under pressure on account of the COVID-19 impact." Jefferies - Buy rating "GOOGL stock could see more pain in the near term, though should benefit L-T from accelerating shift online. With a large global business, GOOGL is exposed to weakness across geos, industries, and co size. While we have cut estimates 3 times and our Q1/ Q2 revs sit 5%/6% below consensus, there is likely more downward bias to the rest of the year. Industry checks show double-digit mo/mo declines in ad pricing in March, and volume offsets from lower prices and shifted budgets are unlikely to make up the difference. Google Cloud should have benefited, but at only ~6% of revs, it is too small to make a dent. However, for those with a longer horizon, we would be opportunistic buyers as GOOGL remains well-positioned to monetize secular shifts to online content and commerce." Bank of America - Buy rating "Revenues will likely decelerate materially with GDP, but recent checks/Snap results have suggested that ad spend has stabilized after a material pause/dropoff in March. Bright spots for 1H'20 should include strong search activity, uptick in YouTube and Teams usage and strength in Google Play. We are encouraged by early signs of cost mgmt., which should really show up in 3Q results. We maintain our Buy rating on Google which screens well for a recession (quality metrics), has significant cost cutting at its disposal, is valued at 13x core EPS in our SOP, and should bounce with the economy, as in 2H'09." MKM - Buy rating "We recently reduced our estimates on Alphabet, Inc. We are modeling a y/y decline in Google revenues in Q2 followed by a continued acceleration in revenues 2H. However, we do not expect Google to return to double-digit revenue growth until Q1 '21. We expect Google advertising revenues to decelerate from 'high teens' during 2019 to 4% in 1Q:20, -1% in 2Q:20, and approx. +4% in 4Q20." Evercore ISI - Outperform rating "We think relative to FB, GOOGL's ad business is seeing more headwind from the lack of travel; we believe brand spend is roughly equivalent between the two platforms inclusive of YouTube, which we estimate is down ~15-20% YoY exiting March. ... .we take the view that advertising on Google search is far less cyclical as a function of the broader ad market than many suspect and that accelerative trends in e-commerce retail are providing greater support than the Street anticipates." JPMorgan - Overweight rating "COVID-19 will weigh meaningfully on GOOGL's ad businesses—more on Search than YouTube—even with GOOGL's scale, large advertiser base, & usually strong ROI. Certain verticals like travel,physical retail, auto, & entertainment will be heavily impacted, & we believe FB holds up better than GOOGL during COVID-19.We expect GOOGL to maintain much of its L-T focused investments that are still possible in the current environment, albeit w/possibly fewer new hires. These investments will weigh on margins N-T, but better position GOOGL L-T. Opportunistic buybacks should provide some EPS support as well." BMO - Outperform rating "Ad checks since our 3/30 upgrade have been weaker and we take our near-term estimates lower. Recent investor conversations have tended to hover around '-20% in 2Q' for total online ad spend and we think GOOG will be ahead of it (-15%). While near-term trends will get all the focus, we are most interested to learn about the decision to add free/organic links to the Google Shopping and what that implies in the competition with AMZN, WMT, EBAY and other retail media platforms as eCommerce volumes soar." Morgan Stanley - Overweight rating "Google Websites growth is likely to rebound in '21 as we believe there are several underappreciated products driven by mobile search, strong YouTube contribution, and continued innovation, such as Maps monetization. Continued expense discipline leads to operating leverage and upward revisions on EPS estimates."
