Axiom Sees 40% Upside In Alphabet As Google Continues To Dominate

Alphabet Inc GOOGL shares have lost 7 percent since April 5. Axiom’s Victor Anthony maintained a Buy rating for the company, with a price target of $1,001. The analyst believes that is “tremendous upside” amid the market volatility and there are a number of catalysts to look out for in the current quarter.

Several Catalysts This Quarter

“Our sum-of-the-parts valuation on Alphabet based on reasonable target multiples calls for 40% upside on the shares,” analyst Victor Anthony wrote. He recommended buying shares on weakness, although volatility is likely to continue in the overall market.

Google remains the dominant player in the search market and continues to gain share based on strength in mobile. Meanwhile, YouTube continues to grow rapidly and has been attracting video ad budgets. Programmatic is recording robust growth. Google segment margins are improving “at a measured pace.”

Anthony noted that the shares were cheap relative to peers as well as to the 20 percent earnings growth forecasted over the next three years.

“Moreover, management is buying back stock and the optionality on Other Bets could be meaningful,” the analyst wrote. He added, “Investor concern over rising TAC due to the mobile mix shift and programmatic, while partly legitimate, appears overblown to us.”