Alphabet Warrants A Positive Valuation: Robert W. Baird
In a research report issued Thursday, Robert W. Baird analyst Colin Sebastian reiterated an Outperform rating on shares of Alphabet Inc (NASDAQ:GOOGL), with a price target of $780, which implies an upside of 19% from current levels.
Sebastian wrote, “Much attention has already been spent on analyzing the revenue and margin differential between core Google and the “speculative” Alphabet businesses. Core Google margins will be meaningfully higher than consolidated results, but that much was always clear. We believe the bigger picture for investors, however, is to understand the potentially massive new market opportunities being built under the Alphabet hood, such as Nest, Calico/Life Sciences, Fiber, Automotive Technology, Shipping/Logistics, etc. While not a perfect analogy, we would point to GE as one precedent in viewing Alphabet’s opportunities for cross-industry growth; and just as lighting-related products once generated the bulk of GE’s revenues and subsequently served as the foundation for the eventual diversification and dominance in new markets, Google has Search.”
“Beyond a more profitable “core” business, we believe Alphabet warrants a positive valuation, and thus shares still appear undervalued,” the analyst concluded.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Colin Sebastian has a total average return of 18.0% and a 73.2% success rate. Sebastian has a 18.5% average return when recommending GOOGL, and is ranked #35 out of 3772 analysts.
Out of the 45 analysts polled by TipRanks, 42 rate Google stock a Buy, while 3 rate the stock a Hold. With a return potential of 12.8%, the stock’s consensus target price stands at $740.21.