Deutsche Bank More Bullish On Google With New 'Blockbuster' Ad Possibilities

Alphabet Inc. GOOGGOOGL’s Google has built one of the best ad product pipelines in the business, Deutsche Bank said Wednesday, increasing its estimates and touting higher confidence in the medium-term outlook for the stock.

The Analyst

Deutsche Bank’s Lloyd Walmsley has a Buy rating on Google and raised the price target from $1,300 to $1,400.

The Thesis

Coming out of the company’s Google Marketing Live keynote in San Francisco, Walmsley is more bullish on Google given what looks to be significant expansion in the ways the company can make ad money. Walmsley said new ads running on Google’s “Discover” feedalone could add about $7.5 billion a year to Deutsche Bank’s estimates by bringing ads to a space that previously wasn’t bringing in any money.

“We see an accelerating pace of new ad product making us meaningfully more confident in the 2020 outlook,” Walmsley wrote in a note.

Blockbuster Pipeline

Other reasons for optimism on the ad revenue front include Google’s roadmap for increased monetization of Google Maps, a revamped product called “Google Shopping,” and improved linking from Google ads, among other promising ad revenue developments.

“We view it overall as a blockbuster pipeline,” Walmsley said.

Price Action

GOOG shares were up 1.2 percent at $1,134 Wednesday morning.

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