Google shares fall; Morgan Stanley ups parent company price target

Google shares fall; Morgan Stanley ups parent company price target

Google shares are lower Thursday, just one day after Morgan Stanley analysts upgraded their price target for the tech giant. The investment bank said it considered the group’s Waymo subsidiary to be undervalued and said the future for the self-driving business was positive.

By 1700 BST, Google shares were 0.30% lower at $1,260.82. The stock has been a little mixed, but broadly higher in recent weeks.

Google price target upgrade

Morgan Stanley analyst Brian Nowak told clients in a research note Wednesday, that his team had raised its 12-month price target on Google shares to $1,515 from $1,325, the highest target on Wall Street. The rating remains at ‘overweight’.

Nowak’s price target upgrade was mainly focused on the lack of value currently ascribed to its autonomous driving business, Waymo.

“We see the launch of Waymo's ride-hailing service by year-end as a potential catalyst for value realization,” Nowak said in his client note. “We believe current Alphabet valuation ascribes little value for Waymo, implying it is still a call option.”

Morgan Stanley currently values Waymo at $45 billion, but Nowak said there is a possibility that it’s value could rise to as high as $175 billion.

“As Waymo grows, we see investors putting a higher success likelihood and value on the asset,” Nowak wrote. “Every 10 percent realization of our total potential Waymo value translates to about $25 per share.”

UK criticises Google on China, child abuse

Separately, UK foreign secretary Jeremy Hunt has criticised the tech giant for its plans to censor content in order to return to the Chinese market, while also being unwilling to remove child abuse content.

“Seems extraordinary that Google is considering censoring its content to get into China but won’t cooperate with UK, US and other 5 eyes countries in removing child abuse content. They used to be so proud of being values-driven…,” Hunt tweeted earlier Thursday.

The outburst follows an open letter signed by 14 human rights groups to CEO Sundar Pichai, condemning their China-related internet plans.

“It is difficult to see how Google would currently be able to relaunch a search engine service in China in a way that would be compatible with the company's human rights responsibilities under international standards, or its own commitments,” the letter read.

“There is a high risk that the company would be directly contributing to, or complicit in, human rights violations,” it added.

By Ilona Billington
Ilona is a freelance writer and editor with over 15 years experience reporting and writing about UK and European economics, real estate, financial markets and central banks.
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