Google To Become Higher-value Stock After Alphabet Restructuring

Google Inc.'s stock target was raised to $847 from $720 at JMP on Monday ahead of the implementation of a planned restructuring under Google's newly-formed parent company Alphabet. Analyst Ronald Josey, who reiterated a market outperform rating on the stock, said that under the new company structure, core Google, which includes YouTube, search and its ads business, will be "significantly more profitable" than the parent company as a whole, with operating margins in the 47% to 53% range. The value of the core Google business would trigger a "re-rating of shares higher" after the transition, said Josey. Alphabet's other businesses, which include its experimental X Lab, will likely continue to operate at a loss, but could drive "significant strategic value" for Alphabet over time, the analyst said. Shares of Google were up 0.7% to $665.26 in recent trade. They have risen more than 19% over the last three months, outperforming the broader S&P 500, down 6.5%.

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