Alphabet’s Target Price Raised to $2,050 at Morgan Stanley; $2,450 in Best Case

Morgan Stanley raised their stock price forecast on Alphabet Inc to $2,050 from $1,880, assigning an “Overweight” rating and said it expects 20% online advertisement growth in 2021.

Internet giant’s advertising revenues rebounded in the third quarter of last year, with YouTube advertising revenues growing more than 30% to $5 billion from the same period a year ago. The California-based multinational conglomerate also benefited from the strong momentum in Play Store as sales surged during the COVID-19 pandemic lockdown.

“We are also bullish GOOGL ($2,050 price target, 20% upside) on the travel recovery (12-15% of paid search) and strong YouTube trends from an improved direct response offering/more stable branded ad market. We are also optimistic about the sum of the parts narrative as we see Google Cloud disclosure in 1Q:21 shining better light on this potential $375 billion asset,” noted Brian Nowak, equity analyst at Morgan Stanley.

“For perspective, this would imply GOOGL (ex-Cloud) is currently trading at 8x core EBITDA for 11% CAGR ’21-’24 EBITDA growth. Sum of the parts would bring our $2,450 bull case (40% upside) into play.”

Morgan Stanley gave a target price of $2,450 under a bull-case scenario and $1,465 under the worst-case scenario. Other equity analysts also recently updated their stock outlook. Alphabet had its price target upped by Robert W. Baird to $2,000. Argus increased their price target to $1,850 from $1,620 and gave the company a buy rating. Credit Suisse Group raised their target price to $1,950 from $1,850 and gave the stock an outperform rating. JP Morgan raised the stock price forecast to $2,050 from $1,870 and gave the stock an overweight rating.

Twenty-eight analysts who offered stock ratings for Alphabet in the last three months forecast the average price in 12 months at $1,944.04 with a high forecast of $2,250.00 and a low forecast of $1,700.00. The average price target represents a 12.62% increase from the last price of $1,726.13. From those 28 equity analysts, 26 rated “Buy”, two rated “Hold” and none rated “Sell”, according to Tipranks.

Alphabet’s shares closed 1.51% lower at $1726.13 on Monday; however, the stock is rose over 30% in 2020.

“Google Websites growth is likely to rebound in 2021 as we believe there are several underappreciated products driven by mobile search, strong YouTube contribution, and continued innovation, such as Maps monetization,” Morgan Stanley’s Nowak added.

“Continued expense discipline leads to operating leverage and upward revisions on EPS estimates.”