Alphabet Price Target Up 25% at Goldman Sachs on Valuation

Goldman Sachs raised its price targets on Google's parent and several tech companies, based on valuations and other factors.

Goldman Sachs raised its share-price target on technology-and-advertising giant Alphabet  (GOOGL) - Get Report 25%, to $1,775 from $1,425, and affirmed its conviction-buy rating.

Goldman analyst Heather Bellini acted on higher multiples for technology companies, low interest rates and falling equity risk premiums, The Fly reports. 

In a report, she unveiled higher share-price targets throughout the software and select Internet companies she covers.

After a 30% drop in the average enterprise-value-to-sales multiple from its February peak, software-company valuations have surged 75% from their mid-March troughs, Bellini says. That puts the valuations above their July 2019 peaks.

Meanwhile, Justice Department officials and some state attorneys general on Friday are slated to confer about antitrust investigations into Alphabet’s Google subsidiary, a knowledgeable source told Reuters.

The federal government and almost every state attorney general have begun antitrust inquiries into Google. The feds are concentrating on bias in searches, on advertising and on deployment of Google’s Android operating platform.

On Tuesday, research firm eMarketer predicted that Google’s advertising revenue will drop 5.3% this year. That would represent the first decline in Google’s ad revenue since eMarketer began forecasting it in 2008.

Google’s advertising sales account for 80% to 85% of revenue at Alphabet, Mountain View, Calif. A slump in ad spending from travel companies is problem No. 1, eMarketer said.

Alphabet shares stood at $1,458 at last check, down 0.4%. They have climbed 39% over the past three months, compared with 40% for the S&P 500. In 2020 through the close of Tuesday trading, Alphabet shares are 9.3% higher.