Top analyst Colin Sebastian of Baird is out with a bullish report on Alphabet Inc (NASDAQ:GOOGL) on the heels of two key announcements. First, Express local shopping service users who once had to shell out $95 as a yearly fee will now reap the benefits of a free membership; secondly, users can welcome Walmart as Google’s newest retail partner. With the tech giant looking to boost customer usage of Express, the analyst applauds this play for a partnership with Walmart for Alphabet to strengthen its standing in the voice commerce section.
From Sebastian’s perspective, Alphabet’s elimination of the yearly membership fee is recognition “that the service was challenged in driving meaningful adoption, with pricing similar to Amazon Prime ($99), as well as retail partners increasingly adding their own incremental shipping/order fees. In addition, we believe the elimination of fees suggests that Google sees a much larger opportunity (and risk) ahead as the share of commerce-related searches shifts to voice platforms.” On the other hand, by adding Walmart as a retail partner, the analyst believes that Google is aiming to add “hundreds of thousands of products to the service [which] should help provide scale to drive incremental usage of Express […] as well as linking to Walmart’s large customer base, which can facilitate a more personalized shopping experience.”
Worthy of note, “Voice First is a key battleground for Amazon and Google,” contends Sebastian, adding that the company set into motion its AI assistant voice shopping platform earlier this year, which means the tech giant will now enable voice commands to translate to consumers buying products from Walmart. Asserting that Google is “well-positioned to benefit from the rise of ‘voice first’ devices and services,” the analyst credits this to the company’s “advanced skills in machine learning and voice recognition, as well as access to massive consumer-oriented data.”
Glancing ahead, Sebastian expects “voice commerce to become a more important part of Google’s revenue model over the long haul, in particular as more searches migrate to voice platforms, and where transactions may ultimately stand in for advertising.” However, for now, the analyst acknowledges, “Amazon is the clear leader in voice commerce with sales of millions of Echo devices,” anticipating the rival company’s Whole Foods acquisition poses a real threat to participation ending on Google Express.
Nonetheless, singing the praises of Alphabet’s collaborative chess move to combine forces with Walmart, Sebastian reiterates an Outperform rating on the stock with a price target on $1,100 representing a near 19% rise over current trading levels.
Colin Sebastian has an outstanding TipRanks score with a 77% success rate and a high ranking of #12 out of 4,608 analysts. Sebastian realizes 24.3% in his annual returns. However, when recommending GOOGL, the analyst posts gains of 18.7%.
Tipranks analytics reveal GOOGL as a Strong Buy. Out of 33 analysts polled by TipRanks (in the past 3 months), 30 are bullish, while 3 are sidelined on Alphabet stock. With a near 17% upside potential the stock’s consensus price target stands at $1,098.90.