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UBS Says Alphabet 'Well-Positioned' For Local Ads

Jayson Derrick

Google parent company Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) is "well-positioned" to capitalize on local advertising, which represents 30 percent of the global ad and marketing services addressable market of around $650 billion excluding China, according to UBS.

The Analyst

Eric Sheridan maintains a Buy rating on Alphabet with an unchanged $1,420 price target.

The Thesis

The local ad market continues to gravitate toward digital channels, Sheridan said in a Monday  note. (See his track record here.)

The companies that are best-positioned to gain share are mobile computing utilities that can offer personalization and data analysis capabilities, the analyst said. Alphabet satisfies all the necessary criteria and could be considered the leading beneficiary of the continued growth of local in the coming years, he said. 

Alphabet is able to offer marketers a suite of benefits, including trust from its users; scaled business and location data; and already strong relationships with advertisers, Sheridan said. As Google continues to innovate in new areas, it can gain billions of dollars worth of new ad revenue, he said. 

For example, Google Maps alone could bring in $9.6 billion in revenue by fiscal 2023, which would be 90 to 140 basis points accretive to Google's core operating margins, the analyst said. The company has other upside opportunities from the integration of additional transaction capabilities in its portfolio of products, according to UBS. 

Price Action

Alphabet shares were trading up slightly at $1,189.93 at the time of publication Monday. 

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Latest Ratings for GOOG

Date Firm Action From To
Feb 2019 Maintains Overweight Overweight
Feb 2019 Maintains Buy Buy
Jan 2019 Maintains Buy Buy

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