Merrill Lynch Remains Positive on Alphabet Inc (GOOGL) in Light of New EU AdSense Charges
The European Commission (EC) sent Google’s parent company Alphabet Inc (NASDAQ:GOOGL) two statements of objections charging that Google’s search and advertising business practices harm competitors. The objections expand on past issues raised by the EC and increase the likelihood that Google will face fines.
Merrill Lynch analyst Justin Post commented, “While the EU charges are a serious matter, Microsoft ’s stock performance after formal charges were filed suggests to us that the overhang is likely partially priced into Google ’s stock and fundamentals could matter more than court proceedings. As such, we remain positive on the stock based on: 1) continued tailwinds from mobile search improvements (coverage, targeting, ad formats), 2) extended text and enhanced campaign ramps, 3) YouTube traction, and 4) attractive relative P/E/G valuation. While the stock could face some NT pressure on growing y/y comp concerns, we maintain our Buy rating and think the best time to own the stock may be ahead of October results, as we believe Google will make improvements in 3Q that drive normal sequential growth.”
The analyst reiterated a Buy rating on shares of Alphabet, with a price target of $925, which represents a potential upside of 26% from where the stock is currently trading.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Justin Post has a yearly average return of 18.5% and a 70.6% success rate. Post has a 27.9% average return when recommending GOOGL, and is ranked #31 out of 4060 analysts.
Out of the 47 analysts polled by TipRanks, 45 rate Alphabet Inc. stock a Buy, while 2 rate the stock a Hold. With a return potential of 23.5%, the stock’s consensus target price stands at $907.37.