Stifel upgrades Google-parent Alphabet to buy, says the advertising giant is a value pick

Published Tue, Mar 30 20218:54 AM EDTUpdated Tue, Mar 30 202110:22 AM EDT

Stifel just upgraded Alphabet shares, calling the technology juggernaut a value pick at its current price. The Wall Street firm upgraded shares of Google's parent to buy from hold and assigned a $2,350 per share price target on the technology giant. Based on Alphabet's Monday closing price of $2045.79, Stifel's price target implies a nearly 15% gain in 12 months. "In addition to our expectations for favorable recovery and secular growth factors, GOOGL shares appear statistically attractive, sporting reasonable multiples relative to some premium valuations we currently see across our coverage universe," Stifel internet analyst Scott Devitt told clients. "Alphabet is a leading value pick, in our view." Shares of Alphabet are up nearly 80% in the past 12 months, but Stifel considers its valuation attractive, assuming an estimated 16.4% compound annual growth rate from 2019 to 2023. "Additionally, we view valuation on GOOGL shares as relatively attractive versus a significant segment of our coverage universe which has experienced material multiple expansion," Devitt said. Stifel is also bullish on Alphabet's advertising business, which the firm believes is primed to benefit from category recovery in Covid-impacted industries. "The resilience and speedy recovery of Alphabet's digital advertising businesses through the course of the pandemic has impressed us. The bounce in advertising dollar flows have followed online consumer engagement, a quick return and redistribution of advertiser appetite, and digital transaction proliferation," Devitt said. Stifel said digitalization is set to continue beyond the pandemic, as advertising budgets seek higher return-on-investment opportunities. Plus, Google should benefit from the downfall in legacy formats such as linear television. "Looking forward, we have increased confidence in Alphabet's positioning to benefit from category recovery (travel, entertainment, media, auto) and more durable share capture in categories such as retail due to relevance as an internet gatekeeper," Devitt added. Shares of Alphabet were down fractionally Tuesday morning. — with reporting from CNBC's Michael Bloom.

The logo of Alphabet Inc's Google outside the company's office in Beijing, China, August 8, 2018.

Thomas Peter | Reuters

Stifel just upgraded Alphabet shares, calling the technology juggernaut a value pick at its current price.