Should Alphabet Raise Its Buybacks?

Alphabet Inc GOOGL GOOG’s Q4 earnings report was good enough to send the company catapulting past Apple Inc. AAPL as the world’s largest company by market cap. Morgan Stanley analyst Brian Nowak likes what he sees from Alphabet, but believes the company is in position to be even more aggressive with its capital return program.

“We are encouraged by the symbolism of Alphabet’s decision to begin returning capital to shareholders, and note that at year end Alphabet has ~$73 billion of net cash on the books… so in effect there is room for continued shareholder friendliness,” Nowak explained.

Related Link: Alphabet Vs. Apple: A Look At The Charts

Morgan Stanley likes the position that Alphabet is in, delivering expanding margins, higher earnings power and responsible research gambles. Nowak was encouraged by the company’s reference to potentially entering the debt markets to generate more financial flexibility and capital structure optimization.

Following the earnings report, Morgan Stanley maintains its Overweight rating on Alphabet stock, but upped its price target to $880.

Disclosure: The author holds no position in the stocks mentioned.

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