Buy Alphabet on potential YouTube TV streaming service, search dominance, Pacific Crest says

Kiyoshi Ota | Bloomberg | Getty Images

Investors should buy shares as the internet company maintains its leading search business position and potentially starts a new TV offering, according to Pacific Crest Securities, which initiated coverage on the firm with an overweight rating.

"We believe GOOGL's current valuation underestimates the sustainability of growth in search and the opportunity to extend YouTube," analyst Andy Hargreaves wrote in a note to clients Thursday. "Despite YouTube's strong growth, we do not believe it has meaningfully disrupted the ... global TV ad market. The launch of a vMVPD [virtual multi-channel video programming distributor] product in 2017 seems likely, and could accelerate revenue growth and drive significant disruption of TV advertising."

"VMVPD" refers to paid streaming TV offerings such as DirecTV Now, Sling and Playstation VUE that compete with traditional cable subscriptions.

More In Pro News and Analysis

CNBC ProInvestment bank picks 3 stocks to buy ahead of Apple's next iPhone launch
CNBC ProAvoid crypto and 'meme stocks' and buy these instead, hedge fund manager says
CNBC ProGambling stocks like Penn are tanking. Deutsche Bank says these are the names to buy in the sell-off