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Morgan Stanley on Google: Could Website Growth Drive Its Revenues?

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Morgan Stanley on Google

Morgan Stanley (MS) included Google (GOOGL) in its top four Internet stock picks. The investment firm chose several Internet stocks that have the potential to outperform the market (SPY) (QQQ) throughout the rest of 2017.

Morgan Stanley Internet analyst Brian Nowak wrote in a client note, “Google websites growth is likely to surprise to the upside … driven by mobile search, strong YouTube contribution, and continued innovation, such as Maps monetization in 2017. Alphabet’s continued expense discipline leads to margin expansion and upward revisions on EPS estimates.”

As the use of the Internet is increasing exponentially, many new users are coming into the market. The broad user-based system and potential demand are expected to drive market sentiment.

Morgan Stanley expects a target price of $1,000 for Google and rates the stock as “overweight.” The investment firm expected a 16% upside for Google from the closing price of $858.95 on April 21, 2017.

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Google’s performance

Google (GOOG) is currently trading at $889.14. Its 52-week high is $892.99, and its 52-week low is $672.66. On a YTD (year-to-date) basis, the stock returned 10% on April 26, 2017.

Google stock has returned nearly 58% over the last two years, and it’s currently trading at a price-to-earnings multiple of 31.9x. Leon Cooperman, the chairman and CEO of Omega Advisors, recently said that Google’s valuations look cheap.

The Technology Select Sector SPDR ETF (XLK), which tracks the performance of the technology sector, returned nearly 10.7% on a YTD (year-to-date) basis, on April 26, 2017.

In the next part of this series, we’ll analyze Morgan Stanley’s view on GrubHub (GRUB).

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