Alphabet Still A Buy With 16% Upside, Says SunTrust

• Alphabet Inc GOOGL shares have appreciated 35.37 percent over the past year, to reach a high of $783.96 on December 29.
• Robert S. Peck of SunTrust Robinson Humphrey has maintained a Buy rating and price target of $850 on the company.
• Peck expects the company to report robust results for Q4, although likely overshadowed by investor focus on additional disclosures after the reorganization of the company.

Analyst Bob Peck stated, “We remain positive on Alphabet given scope for higher investor focus on the core business drivers, while offering visibility into the other "bets" (as GOOGL calls them) as well as its significant private equity investments.”

Given the improved transparency and Alphabet’s shareholder-friendly actions, Peck believes that there could be potential for significant upside to the stock valuation.

While Google Core, including Mobile, YouTube and Search, continues to be the primary driver of value, Peck believes that the “Other Bets”, as well as venture investments and GoogleX/“moonshots” represent optionality in the stock.

According to the SunTrust report, Alphabet is expected to have generated Sites revenue growth of 16 percent year-on-year during Q4, with Network revenue growth of 5 percent. The Q4 estimates have been maintained.

“We think investors likely will look for continued closing of the mobile and video monetization gap vs. desktop, progress on Customer Match and deep app linking, outlook on investments, tax and regulatory update in Europe, and share repurchases,” the report added.