Analysts at Piper Sandler encouraged long-term investors to take advantage of the recent pullback in Alphabet (NASDAQ:GOOGL) (Google) stock to accumulate more shares in a note to clients on Tuesday.
Despite the ongoing antitrust litigation against Google, Piper Sandler maintains an Overweight rating on the stock, with a slightly adjusted price target of $200, down from $206.
The antitrust case, particularly regarding Google's dominance in Search, poses near-term headline risks. However, the litigation process is lengthy, with appeals and potential changes in government mitigating the immediate impact.
As the note highlights, "time is on GOOGL's side," similar to how Microsoft navigated its antitrust battles in the early 2000s.
"We spoke with an Antitrust lawyer to discuss GOOGL's DOJ litigation," said Piper Sandler. "In his view, the government has successfully argued the merits within 2 of 3 cases, but time is on GOOGL's side."
"The Search trial, which is most significant, has a lengthy remedies and appeals process ahead. Meanwhile, there could be a new administration in the interim and technology is advancing fast," they add.
The recent ruling by Judge Amit Mehta is characterized as "measured" by the Antitrust lawyer that Piper Sandler spoke to, with findings of monopoly power in Search and General Text Ads but without evidence of consumer harm.
Piper Sandler believes this balanced approach offers ample grounds for Google to appeal, further delaying any drastic remedies like a break-up.
"A break-up or forced divestiture of Android/Chrome [is] unlikely," according to Piper Sandler's legal expert. "Long-term investors should use recent weakness to accumulate shares."
The analysts view the antitrust case as more of a "distraction" for long-term investors. They believe the current regulatory risks are already priced into the stock and recommend using this weakness as a buying opportunity. Morgan Stanley lowered its price target for Alphabet shares to $200 from $206 in the note.