Credit Suisse sees 8% Alphabet target cut in ‘maximum value destruction’

Credit Suisse analyst Stephen Ju keeps an Outperform rating on Alphabet (GOOGL) after the Department of Justice announced filed a civil lawsuit against Google alleging its advertising technology business is a monopoly and is in violation of the Sherman Act. This is a separate suit versus the DOJ’s prior move to litigate Google’s search business as a monopoly and focuses rather on its Network business, says the firm. The analyst believes that in a "maximum value destruction scenario" in which the contribution from Google’s display business is completely eliminated, the firm’s $128 price target would drop by 8%. In the event that Google were to lose the lawsuit, there may be a divestiture of the display advertising business, and in that scenario shareholders will be otherwise compensated for the loss in free cash flow, so the actual potential value destruction will "theoretically be much less" than 8%, Credit Suisse adds.