Analyst resets price target on Google parent’s stock amid DoJ case

If you Google “recent Alphabet court win,” you probably won’t get many results.

That’s because Google’s parent, Alphabet (GOOGLE) faced serious court cases on both sides of the Atlantic.

Related: Analysts Reset Price Target on Alphabet Shares Ahead of Key Court Event in September

On September 10, the search, advertising and cloud services giant lost its latest legal challenge against a European Union sanction for giving its own shopping recommendations an illegal advantage over rivals in search results, Time reported.

The Court of Justice of the European Union upheld a lower court’s decision, rejecting the company’s appeal against a 2.4 billion euro ($2.7 billion) fine from the European Commission, the 27-nation bloc’s main antitrust enforcer. countries.

“By today’s judgment, the Court of Justice rejects the appeal and thus upholds the judgment of the Tribunal,” the court said in a press release.

The commission’s original decision in 2017 accused the company of unfairly directing visitors to its own Google Shopping service at the expense of competitors.

It was one of three multibillion-euro fines the commission levied on Google over the past decade as part of a crackdown on the tech industry.

Alphabet did not immediately respond to a request for comment.

Alphabet CEO Sundar Pichai during an interview at “The Circuit with Emily Chang” at Google’s Bay View campus in Mountain View, Calif., Wednesday, May 1, 2024. Photographer: David Paul Morris/Bloomberg via Getty Images

Bloomberg/Getty Images

Google lawyer: Federal case is a ‘time capsule’

The news from Europe comes just a day after Google’s latest antitrust lawsuit began.

The Justice Department, along with a coalition of states, and Google each made opening statements on Sept. 9 to a federal judge in Alexandria, Va., who will decide whether Google has a monopoly on online advertising technology, the Associated Press reported.

Related: Alphabet’s earnings are still on track, given parent Google’s AI costs

Prosecutors alleged that Google largely dominated the technology infrastructure that funds the flow of news and information from websites through more than 150,000 online ad sales every second.

Google said the government’s case is based on an Internet of yesteryear, when desktop computers dominated and Internet users carefully typed precise World Wide Web addresses into URL fields.

Advertisers are now more likely to turn to social media companies like TikTok or TV streaming services like Peacock.

In her opening statement, Google attorney Karen Dunn compared the government’s case to a “time capsule with a Blackberry, an iPod and a Blockbuster video card.”

Dunn said Supreme Court precedent cautions justices about the “serious risk of error or unintended consequences” when dealing with rapidly emerging technology and considering whether antitrust law requires intervention.

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Last month, Alphabet suffered a major defeat when a federal judge ruled that Google violated US antitrust law with its search business.

“After carefully considering and weighing the testimony and evidence of the witnesses, the court reaches the following conclusion: Google is a monopolist and has acted as one to maintain its monopoly,” U.S. District Judge Amit Mehta wrote in his opinion.

The contracts gave the company the scope to block potential rivals like Microsoft (MSFT) Bing and DuckDuckGo, the US government claimed, CNN reported.

Kent Walker, Google’s president of global business, said the company plans to appeal Mehta’s findings.

“This decision recognizes that Google offers the best search engine, but concludes that we should not be allowed to make it readily available,” he said.

The analyst says time is on Google’s side

Alphabet is also being sued by longtime rival Yelp (YAPPING) which accuses Google of using its dominance to control the local search market.

“Google is abusing its monopoly power in general search to keep users in the Google-owned ecosystem and prevent them from going to rival sites,” Yelp CEO Jeremy Stoppelman wrote in a blog post.

As for Alphabet stock, shares are up 7.2% year-to-date and 10.2% year-to-date.

More tech stocks:

• Palantir shares are riding high on the S&P 500 for the data analytics group
• Analyst revises Amazon stock price target on ad estimates
• Analyst says Intel would have to divest a key business to survive

In July, the company posted a solid second-quarter earnings report. Revenue was $84.74 billion, up 14% from a year earlier and beating the $84.19 billion expected by analysts. Earnings of $1.89 per share were also higher than the forecast of $1.84.

The revenue growth was driven by the company’s search and cloud segments, which grew 14% and 29% year-over-year, respectively.

Piper Sandler analyst Thomas Champion cut the investment firm’s price target on Alphabet to $200 from $206 and affirmed an overweight rating on the stock after speaking with an antitrust lawyer to discuss the company’s litigation with the Department of Justice, according to The Fly.

In his view, the government has successfully argued the merits in two out of three cases, but time is on Google’s side.

The search process, which is the most significant, has before it a long process of remedies and remedies. Meanwhile, there could be a new administration in the meantime, and technology is advancing rapidly.

The firm’s expert characterized the judge’s decision as “measured,” suggesting a split is unlikely, Champion said.

Piper noted the main short-term risk, but his valuation work suggests it is being assessed and net to consider the Search case and others a distraction. Long-term investors should use the recent weakness to accumulate stocks, according to the investment firm.

DA Davidson initiated coverage on Alphabet with a neutral rating and a $170 price target.

As the company faces challenges in its core search business, its opportunity will migrate to the rest of its portfolio, where its positioning is mixed, the firm said.

Davidson said he expects Alphabet to continue trading at a discount to other megacap stocks “unless it becomes more aggressive in pursuing those opportunities.”

Alphabet is at a crossroads where it will either be “Xeroxed” or emerge as a leader in the most important new computing categories, DA Davidson said.

Related: Veteran fund manager sees world of pain coming for stocks