Alphabet Inc. GOOGL surprised the Street after reporting that YouTube Premium and YouTube TV had over 20 million and 2 million subscribers, respectively, in the fourth quarter, according to BofA Securities.
The Alphabet Analyst: Justin Post maintained a Buy rating on Alphabet with a $1,610 price target.
The Alphabet Takeaways: Alphabet has revenue potential of $18 billion by 2025 as a result of rapid subscription growth, Post said in a Monday note. (See his track record here.)
YouTube TV is expected to become a growth driver in the non-subscription business segment, the analyst said.
Third-party estimates suggested that 22 million households would switch to internet protocol television between 2019 and 2025, he said.
"We conservatively estimate YouTube TV could capture around 25% share of these households by 2025, growing to roughly 6% of U.S. households."
Post gave the stock a potential 2025 valuation of $88 billion, from $26 billion today.
GOOGL Price Action: Class A Alphabet shares were trading 2.12% higher at $1,549.07 at last check Monday.
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