Business Corpus: Google-Parent Alphabet Gets Price-Target Hike On Waymo ProspectsWall Street is undervaluing Google-parent Alphabet because it isn't factoring in the company's Waymo self-driving taxi business, investment bank Morgan Stanley said Wednesday. The post Google-Parent Alphabet Gets Price-Target Hike On Waymo Prospects appeared first on Investor's Business Daily.

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Wall Street is undervaluing Google-parent Alphabet (GOOGL) because it isn't factoring in the company's Waymo self-driving taxi business, investment bank Morgan Stanley said Wednesday. The brokerage sees Alphabet stock on a path toward $1 trillion in market cap.

"We believe current (Alphabet) valuation ascribes little value for Waymo, implying it is still a call option," Morgan Stanley Brian Nowak said in a report to clients. "We see the launch of Waymo's ride-hailing service by year-end as a potential catalyst for value realization."

Nowak raised his price target on Alphabet stock to 1,515 from 1,325 and kept his overweight rating.

Alphabet stock rose 1.5% to 1,264.65 on the stock market today. It broke out of a 20-week consolidation period at a buy point of 1,198.10 on June 20.

Alphabet Stock at $1,290; Waymo Worth $60 A Share

Nowak's new price target values Waymo at $45 billion, but the unit has a potential value of $175 billion, he said.

In addition to its self-driving unit's prospects, Nowak sees continued strength in Google's core internet advertising businesses. It also sees opportunities for Alphabet to monetize YouTube subscriptions and consumer electronics products like Google Home smart speakers and Nest thermostats.

He values Alphabet's core business at $1,290 a share, or roughly $945 billion in equity value. Its noncore businesses like Waymo are worth $60 a share, about $45 billion in equity value, Nowak says. Put together, that totals $990 billion.

Waymo has several emerging business models, including ride-sharing, logistics and technology licensing, Nowak said. It plans to launch the ride-sharing service in Phoenix, where it is currently in testing.

Robo-Taxis Having Technical Problems

Waymo started its early rider program in Phoenix in April 2017. Hundreds of passengers now are using the self-driving taxi service every day, the company said in a blog post.

However, the Information reported Tuesday that the business is still struggling with technical issues and might miss its year-end launch deadline. The company's autonomous vehicles are having trouble merging into highway traffic, navigating around groups of people and making turns, news report said.

Alphabet stock is part of the so-called FANG internet group, with its Google unit comprising the "G" of the clan. The others are Facebook (FB), Amazon.com (AMZN) and Netflix (NFLX).

Also Wednesday, Morgan Stanley's Nowak raised his price target on Amazon to 2,500 from 1,850 and reiterated his overweight rating.

Waymo Could Add Way Mo' To Alphabet's Stock Price

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