Market Overview

Google X Labs Is Bigger Than Initially Thought

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  • Alphabet Inc (NASDAQ: GOOGL) shares came under pressure in the past month, and have lost 4 percent since December 27.
  • Pacific Crest’s Evan Wilson maintained an Overweight rating for the company, with a price target of $850.
  • Wilson mentioned the groups that would fall under the Google X Labs umbrella.

Referring to Alphabet’s first disclosure, analyst Evan Wilson mentioned that there have been a few changes since December, “especially around what now falls under X, formerly known as Google X Labs.”

Google X Labs encompasses more than was previously assumed. In addition to Project Loon, Project Wing, Project Aura and Makani, Alphabet's other drone division, Project Titan, and the robotics division, Replicant, would also be encompassed under X.

Related Link: Alphabet Still A Buy With 16% Upside, Says SunTrust

“We previously assumed Replicant would operate as a separate entity, but after the loss of Andy Rubin as its head and the Marines deciding against buying product from Boston Dynamics, it likely fits better under the X umbrella,” Wilson wrote.

Google X Labs is in the process of forming a new group, named Foundry, which would de-risk projects and “either get them to market faster or kill them in a likely effort to curb unnecessary spending,” the analyst mentioned.

Google Glass remains under the X umbrella and is reportedly under the supervision of Nest CEO Tony Fadell. “This is exactly what shareholders hoped when Nest was acquired; that Fadell would bring his Apple-like design sensibilities to more Alphabet products,” the Pacific Crest noted.

Other Bet Sidewalk Labs formed a new company named Intersection. “Still expect Other Bets losses to be on the low end. With these updates, we continue to suspect the losses will not be as sizable as many have suspected (at the low end of the $2 billion to $5 billion expectation range),” Wilson mentioned. He expressed optimism regarding Alphabet's prospects.

Latest Ratings for GOOG

Jan 2017Pacific CrestReinstatesOverweight
Jul 2016JP MorganMaintainsOverweight
Apr 2016Deutsche BankMaintainsBuy

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Posted-In: Evan Wilson Pacific CrestAnalyst Color Long Ideas Reiteration Analyst Ratings Tech Trading Ideas


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