Shares of Alphabet (GOOGL) were higher on Tuesday after the parent of search, advertising and cloud giant Google was upgraded to buy from hold at Stifel with a higher price target.
The investment firm raised its price target on the Mountain View, Calif., company's shares to $2,350 from $2,025. Alphabet at last check was 0.6% higher at $2,067.
"The resilience and speedy recovery of Alphabet's digital advertising businesses through the course of the pandemic has impressed us," analyst Scott Devitt said.
"The bounce in advertising dollar flows have followed online consumer engagement, a quick return and redistribution of advertiser appetite, and digital transaction proliferation."
Looking forward, Stifel has increased confidence in Alphabet's positioning to benefit from industries primed for a post-COVID recovery, like travel, entertainment, media and automotive.
Alphabet is also primed for more "durable" market-share capture in categories like retail and advertising due to Google's placement as an internet gatekeeper, according to Tuesday's note.
"Digitalization is set to continue beyond pandemic times as ad budgets seek higher [return-on-investment] opportunities, and legacy formats such as linear television offer less attractive capabilities over time. We view this flow of ad dollars as unlikely to reverse," Devitt said.
That trend is most evident with Google search and YouTube ads, which had a fourth-quarter 2020 growth rate of nearly 22%, the pair's highest growth mark since third-quarter 2018's more than 60% greater scale.
The firm expects positive upward revisions to Google search to be the primary driver of stock performance over the medium term.