In its latest note to clients, financial services firm Credit Suisse named Alphabet as its leading Internet stock choice, Business Insider reports. The company also cited Facebook and Amazon as the rest of the top three consumer Internet stocks to acquire. Analysts from the banking organization said it's possible that Alphabet shares are worth an additional one-third of what they are currently trading for, putting their value at approximately $1,100 per share. That target would see the company's market capitalization at $757 billion, and on Monday in New York as of 2:21 pm, Alphabet shares went up to $833.64, up by 1.2 percent, presumably as a result of Credit Suisse's statement.
Credit Suisse analyst Stephen Ju explained the reason for Google's parent company currently being their top choice by citing several main pointers where the company is expected to outperform the current expectations of investors. Key areas include the monetization of advertising with Google Search, as well as non-search businesses such as Google Play, Google Cloud, and YouTube. Further aspects mentioned were Google's Other Bets and their likely commercialization, along with other initiatives ripe for monetization such as Maps. A possible risk with Credit Suisse's view concerns a fall in the smartphone OS market share and a slow adoption of new Google ad formats.
Although Alphabet's Google Search leads the company's business interests, Credit Suisse forecasts that other subsidiaries, including those named above, will expand so that within three years they will form a third of Alphabet's business. On a related note, while Facebook trades at 25 times of Credit Suisse's 2018 non-GAAP EPS estimate, and Amazon trades at 55 times of the thereof, Alphabet trades at approximately 16 times that estimate. In January this year, Alphabet reported increases of several of its key revenue sources, and in a report of Q4 results for the 2016 fiscal year, the company revealed exceptional growth. Approximately $26 million in revenue was recorded during Q4 2016 compared to $21 million in Q4 2015, marking a year-on-year revenue increase of 22 percent. At that time, Alphabet said that mobile search and YouTube were the main areas of revenue increases while newer investments and Google's 'Other Bets' were other areas of growth, though ones that are yet to become truly profitable.