Like many stocks, Google parent company, Alphabet (NASDAQ:GOOG,NASDAQ:GOOGL) took quite a beating over the last few days. In just two days, Google stock fell from a high of $1,532 to $1,384.
Remember, as Baron Rothschild would tell investors, “The time to buy is when there’s blood in the streets, even if the blood is your own.” He knew that very well, considering he made a small fortune buying the panic that followed the Battle of Waterloo against Napoleon.
With a good chunk of fear priced in, I strongly believe Alphabet will refill that bearish gap again at $1,532 and move to $1,600 this year.
Analysts Are Bullish on Alphabet
There’s further upside for the Internet giant, says Citi analyst Jason Bazinet.
Not only did he lift his price target to $1,700 from $1,500, he reiterated his buy rating for two key reasons. One, he believes regulatory risks have become greatly “overblown.” Two, he believes there’s still room for “positive operating leverage” thanks to the cloud business.
Barron’s also likes it, says contributor Andrew Bary:
“The stock could get a lift if the company takes shareholder-friendly steps that it has long resisted, including increasing its share-repurchase program, paying a dividend, reining in expense growth, and offering more financial transparency about major businesses. Chances for such moves improved recently, after co-founders Sergey Brin and Larry Page gave up their management roles.”
There are Plenty of Growth Accelerators Ahead
For one, once Larry Page and Sergey Brin stepped aside, putting Google’s CEO Sundar Pichai in charge, there’s increased hope we’ll see buybacks or even a dividend payout. Two, Alphabet has online advertising dominance with 73% market share.
That may only grow after the company rolled out Google Chrome 80. That, says Investorplace contributor, Larry Ramer, “will prevent advertisers and other digital ad platforms from accessing trackers, known as cookies, from some websites. The changes will make Google’s competitors less attractive to advertisers because competing websites will not have as much information for targeting consumers.”
Three, Google Cloud has been improving significantly under CEO Thomas Kurian.
At the moment, the company’s share of the cloud is just 4%, reports The Wall Street Journal’s Aaron Tilley. But that will likely change. Plus, Google’s cloud business helped generate 5.5% of Alphabet sales last year, or $8.9 billion from $4.1 billion year over year. Better still, it doesn’t hurt that companies could spend more than $260 billion on cloud services in 2020.
The Bottom Line on Google Stock
Alphabet has become a “blood in the streets” opportunity. Once the smoke clears from the coronavirus story, I strongly believe the stock will refill its bearish gap at $1,532. Coupled with strong market growth, I wouldn’t be shocked to see shares closer to $1,600 by year-end.
Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999. As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.
