Alphabet Inc (NASDAQ:GOOGL) and Walt Disney Co (NYSE:DIS) are sending waves through the grapevine that Disney and YouTube have allegedly come to an official licensing agreement for the overarching DIS networks family as part of an expanded YouTube streaming offering to be revealed by the end of 2017. Top analyst Colin Sebastian at Baird sees the rumored deal as a way for GOOGL to unlock a stellar video offering and accordingly offers a bullish standpoint.

Sebastian believes, “The rumored Disney agreement comes on the heels of the content deal inked with CBS late last year, and represents a more aggressive push into long-form/original video content. On the 4Q16 earnings call, the company highlighted that YouTube’s ad-free subscription service, YouTube Red, now supports 27 original series in five countries. With Disney and CBS now on-board, we believe a YouTube live stream bundle could help accelerate the migration of offline ad-budgets toward digital platforms, and would drive material growth in Google’s subscription business, a key positive, in our view.”

“Given the scale/technological advantages of large-internet platforms, we believe companies such as Amazon, Alphabet, and Facebook are better-positioned to capitalize on ‘cord-cutting’ trends relative to incumbent media companies, as the treasure-trove of user data can be leveraged across devices/properties to improve the respective advertising and e-commerce ecosystems,” Sebastian concludes.

Therefore, the analyst reiterates an Outperform rating on shares of GOOGL with a $960 price target, which represents a 15% increase from where the stock is currently trading.

Colin Sebastian has a very good TipRanks score with a 73% success rate and a high ranking of #27 out of 4,381 analysts. Sebastian yields 17.2% in his annual returns. When recommending GOOGL, Sebastian garners 16.4% in average profits on the stock.

TipRanks analytics exhibit GOOGL as a Strong Buy. Out of 29 analysts polled by TipRanks in the last 3 months, 27 are bullish on Alphabet stock, 1 remains sidelined, and 1 is bearish on the stock. With a return potential of nearly 19%, the stock’s consensus target price stands at $989.14.

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