The accelerating success of Alphabet’s self-driving car unit, Waymo, spells big upside for stakeholders, according to Morgan Stanley.
The bank raised its price target for the tech titan to $1,515, the highest forecast of any Wall Street brokerage and implying more than 20 percent upside over the next 12 months.
For analyst Brian Nowak, Waymo’s leadership in the global race to develop driverless cars had not been fully incorporated into investor expectations.
“We see the launch of Waymo’s ride-hailing service by year-end as a potential catalyst for value realization,” Nowak said in a note Wednesday. “We believe current Alphabet valuation ascribes little value for Waymo, implying it is still a call option.”
He added that while Morgan Stanley currently values Waymo at $45 billion, the brokerage’s research indicates the segment could grow to $175 billion in value as it expands its ride-sharing, logistics and licensing businesses.
Nowak’s higher targets came just days after a business registration filing revealed that Waymo has established a subsidiary in Shanghai, the latest evidence that the U.S. internet giant is trying to break into the Chinese market.
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