Goldman Is Buying Alphabet, Sets $890 Target

Courtesy of Benzinga.

Goldman Sachs issued an update on Alphabet Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL) after the company reported 4Q15 earnings of $8.67 that exceeded Wall Street expectations of $8.09. The firm reiterated its Buy rating and raised the price target from $850 to $890.

Shares traded recently at $804.50, up 4.4 percent.

Analysts Heather Bellini and Shateel Alam wrote, "continued strength in the core business stole the show. Strength in mobile search and YouTube were again called out as key drivers of the company's performance, as well as ongoing momentum in programmatic. All in, we believe the market will continue to favorably react to Alphabet's increased disclosure, accelerating momentum in areas of Google such as YouTube and mobile search, as well its commitment to managing expense growth while staying committed to topline growth."

Related Link: Google Core Is 'Scarce' And 'Undervalued,' Deutsche Bank Says

Analysts at Goldman Sachs highlighted two reasons why they see strength in Alphabet:

1. Strength in search

Analysts wrote that strength in mobile search was driven by changes in advertising formats, resulting in an increase in click rates. Goldman Sachs believes that this trend of increasing clicks on its search platform may continue to drive top-line growth for Alphabet. Paid clicks grew 31 percent vs. consensus of 22 percent.

2. Strength in their video platform

Goldman Sachs highlighted YouTube as a particularly strong performer for Alphabet, with analysts believing that the platform is a good substitute for television advertising spending.

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