Pivotal's Wieser: Time To Buy Alphabet, Still Go Long Facebook And Twitter

Brian Wieser of Pivotal Research has upgraded Alphabet Inc GOOGL to Buy from Hold, while retaining his Buy ratings of Facebook Inc FB and Twitter Inc TWTR. The analyst continues to view Facebook much more positively than Alphabet. Wieser raised the GOOGL target price to $970, a 28 percent upside from Monday's close, saying that "current quarter results for Alphabet and core Google business trends should be positive overall. Foreign exchange headwinds should continue to damper the company's otherwise stellar top-line results, but to a lesser degree than in recent quarters." "Overall, we estimate +16% revenue growth and +18% revenue ex-TAC growth year-over-year. The company's hegemonic position in digital advertising alongside Facebook is fundamentally unchanged, and we continue to expect Google to sustain double digit growth rates in advertising on an ongoing basis," the analyst highlighted. "..we are more inclined to believe the narrative which suggests the company is more focused on profitability improvement and capital efficiency efforts at this time. These factors are what give us the greatest degree of confidence in upgrading our recommendation on the stock from Hold to Buy at this time," Wieser elaborated. Facebook The analyst raised his price target on Facebook shares to $154 from $136. "For 1Q16 we are forecasting +50% company-wide revenue growth including +52% advertising growth. These figures represent modest decelerations vs. 4Q15 levels but remain stellar by any other global standard given the revenue base against which this growth is occurring," Wieser said. He added: "Although Facebook and Alphabet's Google are co-dominant players in global digital advertising, Facebook's focus on their core business and its future evolution separates the company from its larger peer's parent. We think that capital requirements and operating margins will also be superior for an extended time horizon as a result." Twitter Wieser increased the price target of Twitter shares to $39 from $32. "Overall, we think Twitter is on pace to capture approximately 1.5% of global digital ad spend in 2016, and 2.0% of global digital ad spending in 2020, equal to a +22% CAGR over the next five years," Wieser highlighted. The analyst said the recently announced agreement with the NFL should provide Twitter with another opportunity to capture large brand budgets. "Further, we think the company's ad tech-related products (including Twitter Audience Platform, TellApart, TapCommerce and MoPub) all provide significant long-term upside potential that have not been fully realized to date," the analyst added. Shares of Alphabet closed Monday's trading down 0.25 percent to $757.54, Facebook fell 1.48 percent to $108.99 and Twitter also declined 0.87 percent to $16.50.