This Top Analyst Sees Subscription Growth Ahead For Alphabet Inc (GOOGL)


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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  • Jack Smith

    The key is two weeks ago Google finally added the ability to use their data to target ads on YouTube. Many do NOT realize that Google had never done this.

    So now ads on YouTube will be far more valuable. People interested in holiday to Cancun can get local tan spraying ads. Targeted ads are worth a lot more than just broadcasted ads. Plus it makes many companies able to advertise that could not as it was just too inefficient.

    The more interesting thing is the changes Google has made recently in terms of your account, and DRM. It suggests that we might also get offline capabilities with these deals. So grab the basketball game before a flight and watch it on the plane.

    Take ESPN. Young people are tuning out because of cord cutting. Put ESPN on YouTube and problem fixed without hurting too much with the older people as they tend to watch TV the old fashion way.

    But I would really like to see with the new Live streaming on YouTube that ESPN opens the door to new sports content. Love to see the top high school game each week for example. Tons more content possibilities than today.

    ESPN and the others needs to think far more creative with this new technology. How about interactive vote on sports plays each day and then keep the highest ranked one for the day, week, etc.