The Wall Street Journal reported that Alphabet Inc (NASDAQ:GOOGL) will be expanding its Uber and Lyft rival ride-sharing service in San Fransisco, intending to extend the program to all San Fransisco-based Waze users by this fall. The pilot program allows drivers to carpool using Alphabet’s Waze navigation app, which the company acquired in 2013.
On the back of this app expansion, Baird top analyst Colin Sebastian reiterates an Outperform rating on shares of GOOGL with a $900 price target, which represents a nearly 14% increase from where the stock is currently trading.
Sebastian believes, “Given Google’s well-publicized investments in autonomous driving technology, we believe that the ride-sharing news, if accurate, would look to expand upon Google’s already-significant road/traffic database, and could help accelerate the pace of development within its autonomous car division.”
Yet, “Google’s go-to-market strategy for automotive technology remains unclear,” Sebastian comments. Recently, executive David Drummond received pressure to ultimately resign from his role on Uber’s board of directors. While Google actually was one of the initial investors in Uber, now when considering that the tech titan is in the process of soon rolling out its Waze ride-sharing app, the step-down makes sense amidst a clear conflict of interest.
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Though ultimately the analyst recognizes Google enters a cutthroat autonomous driving space, confronting pressure “[…] from both incumbent “on-demand” providers (Uber, Lyft) in addition to traditional auto OEMs (Tesla, Ford, GM, etc), we believe there will be multiple benefactors of driverless technology over the long term, and Google stands to capitalize not only from the potential sale/licenses of its technology, but also via the integration of its user data for other on-demand services (advertising, commerce, etc),” the analyst concludes.
According to TipRanks, top five-star analyst Colin Sebastian has achieved a high ranking of #7 out of 4,129 analysts. Sebastian upholds a 79% success rate while garnering 19.0% in his annual returns. When recommending GOOGL, Sebastian earns 16.9% in average profits on the stock.
TipRanks analytics demonstrate GOOGL as a Strong Buy. Based on 32 analysts polled in the last 3 months, 31 rate a Buy on GOOGL, while 1 maintains a Hold. The consensus price target stands at $943.13, marking a 19% upside from where the shares last closed.