Wall Street research firm RW Baird argued this week following a recent Google (NASDAQ:GOOGL) event outlining the next gen of Maps and its expanding local service features, that Google’s free mobile mapping app represents a “YouTube-like” revenue opportunity.
Baird’s Colin Sebastian, who has an ‘Outperform’ rating and a $930 price target on Google stock, says as Google Maps ramps its own local service capabilities it could begin to increasingly pull traffic away from companies including Yelp (NYSE:YELP), TripAdvisor (NASDAQ:TRIP,) Groupon (NASDAQ:GRPN) and GrubHub (NYSE:GRUB).
According to Sebastian, Maps “is one of [Alphabet’s] most valuable assets”. He estimates the mapping service could fetch the company $5 billion additional revenue per annum over the next three to four years, representing almost a third of the search giant’s advertising revenue growth by the end of FY 2020.
“We note that $5 billion would equate to roughly $3.50/year per Maps user”, Sebastian said in his report.
Illustrating the importance of Maps, the analyst, who calls Maps one of Google’s “largest untapped pools of revenue”, says that while 60% of Google search queries already incorporate some form of local intent, the location-related searches are growing 50% faster than mobile searches overall. Further, Sebastian called Maps one of the most underappreciated assets of the company, pointing out the uniqueness of the product with hardly any competition.
Price Action
Google-Parent Alphabet Inc is a big decliner this session with its shares plunging nearly 21 points on the day. The move comes on strong volume too with the issue trading 4.5 million shares compared to the average daily volume of 1.52 million.
Shares of Google have declined 3.6% in the last 4 weeks and 2.9% in the past three months. Over the past 5 trading sessions the stock has gained 0.38%.
The $530 billion market cap Mountain View, California-based company has a median Street price target of $970 with a high target of $1,120.00. Currently, there are 38 analysts that rate GOOGL a ‘Buy’, 3 rate it a ‘Hold’. Only one analyst rates the name a ‘Sell’.
Alphabet Inc. Cl A is up 27% year-over-year, compared with a 3.9% gain in the S&P 500.
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