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Alphabet (GOOGL) Price Target Raised by Baird, Rating Maintained

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Alphabet’s (GOOGL - Free Report) price target has been recently raised more than 15.9% to $2,000 from $1,725 by investment firm Robert W. Baird & Co. However, the analyst, Analyst Colin Sebastian has maintained the stock’s rating at Outperform.

The analyst remains encouraged by the company’s strong e-commerce trends and is optimistic about the outlook in 2021.

Markedly, Google benefited from strong momentum in Play Store sales boosted by coronavirus-led social distancing norms in 2020. Google’s Play Store accounted for 32% of total sales, which came in at $129 million, up 33% year over year on Christmas Day 2020, per Sensor Tower report.

Together, Apple's App Store and Google Play registered record breaking sales of $407.6 million, up 34.5% year over year.

In addition to Google’s strong Xmas sales gains on apps, the analyst believes that the expected recovery in travel, recreation and automotive ads in 2021 will lead to improved digital advertising visibility.

Alphabet’s advertising revenues bounced back in third-quarter 2020, with YouTube advertising revenues up 32.4% year over year to $5 billion, accounting for 10.9% of quarterly revenues.

Share Price Appreciation

A glimpse of the price trend shows that the stock has had an impressive run on the bourses over the past three months. Alphabet has returned 18.2%, outperforming the S&P’s 11% rally in the past three months.

Analysts have become bullish about the company over the past 60 days. Its earnings estimates for fourth-quarter 2020 have increased 2% in the said period to $11.63 per share.

Bottom Line

Alphabet is leaving no stone unturned to enhance the search platform on the back of a strong expansion strategy. Google’s robust mobile search is also a positive. Its initiatives toward elimination of bad ads and introducing useful search updates are tailwinds.

In addition, it is making all efforts to secure its leading position in search, which is being threatened by Amazon (AMZN) as more and more consumers depend on the online marketplace to search for products directly.

Last year, the company announced plans to buy an e-commerce startup Pointy. The latest deal is a testament to its efforts to maintain dominance in the digital search and advertising market.

The deal will likely help to boost the momentum of Google search in various markets. Further, it will boost traffic on its search platform and fuel Google's search dominance. In addition, the deal will help Google to bolster presence in the online advertisement world, from which it earns maximum revenues.

However, the company faces persistent pressure from advertisers to tighten controls on the YouTube video service. Also, the company’s growing litigation issues and increasing expenses might hurt profitability.

Zacks Rank & Other Stocks to Consider

Alphabet currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the broader technology sector include The Trade Desk Inc. (TTD - Free Report) , Dropbox, Inc. (DBX - Free Report) and Inuvo, Inc. (INUV - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for The Trade Desk, Dropbox, and Inuvo, Inc. is currently projected at 25%, 40.9% and 30%, respectively.

These Stocks Are Poised to Soar Past the Pandemic

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