UBS sustains Alphabet stock rating at neutral on DOJ submission

On Thursday, UBS maintained a Neutral rating on Alphabet Inc. (NASDAQ:GOOGL) shares, with a steady price target of $192.00. The firm's analysis acknowledged the Department of Justice's (DOJ) submission of its Initial Proposed Final Judgment (PFJ), which includes a comprehensive set of measures aimed at addressing the court's previous decision that deemed Google a monopolist in the search market.

The UBS analyst noted that the proposed remedies align with the initial reports from August and the DOJ's framework from early October. The government's actions to potentially diminish Google's dominance in the search sector pose a long-term risk to revenue projections. However, the impact on Alphabet's business operations is not expected to be immediate.

The potential changes to Google's business practices are contingent on the outcome of appeals and a possible hearing with the U.S. Supreme Court, which is anticipated to occur around 2028. Google has indicated its intention to appeal and is likely to seek an injunction, which would delay any operational modifications.

The analyst pointed out that until the legal proceedings are resolved, significant changes to Google's business model are not anticipated. The company's current operations and revenue streams are expected to continue without immediate effect from the DOJ's proposed remedies.

The UBS statement provides a perspective on Alphabet's stock amidst ongoing legal challenges. Alphabet's share price and market performance will continue to be monitored as the situation evolves, with the current Neutral rating reflecting a cautious outlook on the stock's future amidst these legal proceedings.

In other recent news, Alphabet Inc. has been in the spotlight with Loop Capital increasing its price target for the company's stock based on projections for the year 2026. The firm has retained a Hold rating on the shares, indicating a cautious yet optimistic approach.

Donald Trump, if reelected, has indicated a shift in antitrust policies, potentially halting efforts to break up Alphabet's Google. Trump has questioned the impact of dismantling Google and suggested alternative measures to ensure fairness without a breakup.

In legal developments, a federal judge dismissed a class action lawsuit against Google, which accused the tech giant of profiting from fraudulent Google Play gift cards. The lawsuit was brought forth by a resident who claimed to have lost $1,000 to scammers.

Furthermore, the United States government has renewed its request for Italy to cancel its digital services tax, which targets tech giants such as Google. Italian authorities are considering expanding the tax's reach in the upcoming 2025 budget, which is expected to generate an additional €51.6 million.

Lastly, Trump has pledged to pursue legal action against various individuals, including technology leaders like Google, accusing them of election interference. These are recent developments that investors should be aware of.

InvestingPro Insights

To complement UBS's Neutral rating on Alphabet Inc. (NASDAQ:GOOGL), recent data from InvestingPro offers additional context for investors. Despite the ongoing legal challenges, Alphabet's financial metrics paint a picture of a robust company. The company's revenue for the last twelve months as of Q3 2024 stood at $339.86 billion, with a notable revenue growth of 14.38% over the same period. This growth trajectory aligns with Alphabet's position as a prominent player in the Interactive Media & Services industry, as highlighted by one of the InvestingPro Tips.

Furthermore, Alphabet's profitability remains strong, with an adjusted operating income of $109.05 billion and an operating income margin of 32.09% for the last twelve months. This financial strength is underscored by another InvestingPro Tip, which notes that Alphabet holds more cash than debt on its balance sheet, potentially providing a buffer against legal and regulatory headwinds.

The company's P/E ratio of 23.15 and PEG ratio of 0.53 suggest that the stock may be trading at attractive valuations relative to its earnings growth potential. This is further supported by an InvestingPro Tip indicating that Alphabet is trading at a low P/E ratio relative to its near-term earnings growth.

For investors seeking a more comprehensive analysis, InvestingPro offers 9 additional tips that could provide deeper insights into Alphabet's financial health and market position. These additional tips could be particularly valuable in assessing the long-term impact of the DOJ's proposed remedies on Alphabet's business model and stock performance.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.