Analyst renews price target for Google parent company’s stock amid DOJ case

Google Lawyer: Federal Case Is a ‘Time Capsule’

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

The Justice Department, led by a coalition of states, and Google filed opening statements on September 9 in a hearing before a federal judge in Alexandria, Virginia, who will decide whether Google has a monopoly on online advertising technology, the Associated Press reported.

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Prosecutors say Google has a significant advantage over the technological infrastructure that funds the flow of news and information on websites by selling more than 150,000 online ads per second.

Google says the government’s arguments are based on ancient times when the internet was only available to desktop computers and internet users were careful to type exact 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 containing a BlackBerry, an iPod, and a Blockbuster graphics card.”

Dunn said Supreme Court precedents warn justices of “serious risks of error or unintended consequences” when dealing with rapidly evolving technology and considering whether antitrust law requires intervention.

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Last month, Alphabet suffered a major setback when a federal judge ruled that Google had violated U.S. antitrust law in its search business.

“After carefully considering and weighing the witness testimony and evidence, the court reached the following conclusion: Google is a monopoly and operates like a monopoly to maintain its monopoly,” U.S. District Judge Amit Mehta wrote in his opinion.

These contracts gave the company the scale to block potential rivals like Microsoft (MSFT) Bing and DuckDuckGo – so says the US government, reports CNN.

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

“This decision recognizes that Google offers the best search engine, but says we shouldn’t be able to easily share it,” he said.

Analyst says time is on Google’s side

Alphabet is also being sued by its longtime rival Yelp (WHINE) in which Google was accused of using its dominant position to control the local search market.

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

As for Alphabet shares, they are up 7.2% since the beginning of the year and 10.2% year-on-year.

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In July, the company posted a solid second-quarter earnings report. Revenue came in at $84.74 billion, up 14% from a year earlier and exceeding the $84.19 billion analysts were expecting. Earnings of $1.89 per share also beat the $1.84 forecast.

Revenue growth was driven by the Search and Cloud segments, which grew 14% and 29% year-over-year, respectively.

Piper Sandler analyst Thomas Champion lowered his price target on Alphabet shares from $206 to $200 and reaffirmed an “overweight” rating on the stock after speaking with an antitrust lawyer about the company’s litigation with the Justice Department, The Fly reported.

He said the government had successfully presented the arguments for and against in two of the three cases, but time was on Google’s side.

The Search process, which is the most important, has a long process of remedies and appeals ahead of it. In the meantime, there may be a new administration, and technology is developing rapidly.

An expert from the company described the judge’s decision as “balanced,” suggesting a split is unlikely, Champion said.

Piper noted the near-term risk from the headlines, but its valuation work suggests that’s priced in and net of the view that Search and other cases are a distraction. The investment firm said long-term investors should take advantage of recent weakness to pile on the stock.

DA Davidson initiated coverage of Alphabet shares with a Neutral rating and a $170 price target.

The company said that as its core search business faces challenges, its opportunities will expand to the rest of its portfolio, where positioning is varied.

Davidson said he expects Alphabet to continue to trade at a discount to other large-cap stocks “unless it becomes more aggressive in seeking out those opportunities.”

According to DA Davidson, Alphabet is at a crossroads. It will either be “skewed” or it will become a leader in the most important new categories of computing.

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