The firm's analysts raised the company’s price target to a Wall Street-high $1,735 from $1,550. That indicates 20% upside from the stock’s Monday close, thanks to the potential for “a more shareholder friendly approach under the new leadership.”
The company recently named Sundar Pichai as CEO, giving the tech giant some new blood and investors reason for increased optimism.
“We look for any improvements in disclosure, either explicitly in reported results or on the call, the pace of buyback activity, particularly after the new $25 billion authorization in the second quarter, and any forward outlook commentary regarding top-line or expense controls,” analyst Lloyd Walmsley wrote.
Deutsche Bank says investors should be excited about Pichai’s pay package, as about 38% of his bonus is contingent on the stock performance. This signals that the company’s management is focused on stock-price appreciation.
Usually an 18 times forward expected earnings multiple would be a premium, but Alphabet’s current stock price is too cheap, according to Deutsche Bank analysts.
This bullish take is based on the strong early returns from the launch of YouTube Shopping ads at the beginning of November, as well as other product ramping like app install ads.
Alphabet shares at last check were off 0.4% near $1,435.
Alphabet is a key holding in Jim Cramer’s Action Alerts PLUS charitable trust.