Morgan Stanley Offers Differing Ratings on Alphabet Inc (GOOGL) and Performance Sports Group Ltd (PSG)

Analysts at Morgan Stanley weighed in on Google parent Alphabet Inc (NASDAQ:GOOGL) and equipment and apparel firm Performance Sports Group Ltd (NYSE:PSG) following recent corporate announcements. While one analyst is optimistic regarding Google’s Cloud services, another analyst downgraded his rating on Performance Sports Group in light of an uncertain sales outlook.

Alphabet Inc

Analyst Brian Nowak weighed in on Alphabet in anticipation of the company’s Google Cloud Platform conference. The analyst reiterated an Overweight rating on the company with a price target of $880.

According to Nowak, “cloud be a material incremental driver to GOOGL long-term earnings power…if they can execute.” At the conference, the company is expected to weigh in on its marketing strategy for cloud services amid harsh competition from established players in the industry. The conference will also feature guest speakers representing Snapchat, Spotify, and Netflix.

Nowak explained, “Given GOOGL’s focus on innovation and the fact that [Amazon Web Services, Inc.] has historically used its annual conferences to announce new products, we also look for new Google Cloud features and improvements to distinguish its offering.” Google is expected to give insight into how much it anticipates investing into its Cloud platform, if it is cutting prices on Cloud offerings, and recent developments in attracting large enterprises. These announcements could have a major impact on the future performance of Google’s cloud services and their success in the competitive marketplace.

According to TipRanks, Nowak has a 60% success rate and a 5.7% average return per rating. Nowak’s views match those of the majority of analysts who have weighed in on Alphabet Inc in the last 3 months, with 35 bullish and 1 on the sidelines. The average 12-month price target for GOOGL is $923.33 based on these 36 analysts, marking a 23% potential upside.

Nowak statPerformance Sports Group Ltd

Morgan Stanley analyst Jay Sole downgraded shares of Performance Sports Group from Overweight to Equal Weight. The analyst also lowered his price target from $19 to $5.

Sole explained, “PSG’s 3Q profit warning signals visibility into the business is much poorer than previously thought and caused significant EPS estimate and PT cuts.” The analyst also recognized the recent deterioration of the sporting goods retail environment, particularly in baseball bats and due to bad debt allowances from hockey retailers. The analyst “[continues] to believe PSG owns high quality brands and a unique innovation engine. However, the sporting goods retail environment is in disarray, especially in baseball, and earnings visibility has become very poor.”

Due to this cloudy outlook, the analyst downgraded his rating, adjusted FY16 EPS from $0.66 to $0.13, and slashed his price target. The analyst stated, “If the sporting goods retail environment rebounds, pricing power proves resilient, and leverage decreases, we could revisit our rating.”

Jay Sole stat

According to TipRanks, Sole has a 57% success rate and a 11.2% average return per recommendation. Of 8 analysts covering PSG in the last 3 months, 5 are bullish while 3 remain neutral. The average 12-month price target for these 8 analysts is $7.06, marking a 78.28% upside from where shares last closed.


Stay Ahead of Everyone Else

Get The Latest Stock News Alerts