Ruling against Google could be catalyst for Microsoft stock, says Bernstein

Discussing the potential repercussions of the USA vs. Google trial for Microsoft, Bernstein analyst Mark Moerdler says that if the courts rule against Google (GOOGL), investors would view it positively for Microsoft (MSFT). Bing is Google’s main competitor, so naturally, a ruling that prevents Google from paying smartphone manufacturers and wireless carriers to make Google their default search engine will be viewed as favorable for Bing, which could be a catalyst for the stock, the firm argues. Bernstein thinks a likely outcome would be a switch from default engines to choice screen, which would moderately benefit Microsoft. If all of that can cause Bing to gain even 1-2% market share, it wouldn’t really affect Google’s 90%-plus market share, but it would effectively double Bing’s search revenue, the firm argues. However, a ruling is likely be appealed, and the process could take years, so it is unlikely to benefit Microsoft in the near-term, says Bernstein, which has an Outperform rating on Microsoft’s shares with a price target of $406.