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In a surprise move, Google announced that it is reorganizing into a holding company called Alphabet. The core "Google" business will be now just be one company within the broader organization, and other more ambitious projects (including driverless cares and life science projects) will now be separated under the Alphabet umbrella. Bloomberg has collected an assortment of notes put out by equity analysts who see the move in an extremely positive light.
Cantor Fitzgerald's Youssef Squali: (Buy rating, price target $720) Google unveiled plans to create a new public holding company, Alphabet Inc., with Google Inc. (core search, ads, maps, apps, YouTube and Android) carved out as a wholly owned subsidiary. The stated goal here is to increase management's scale aspirations, and focus across its consolidated businesses. We view this move as a key step towards bringing much needed financial transparency to core Google in terms of growth, margin profile and capital intensity vs. its other ventures, and thus see it very positively for the stock short- and longer term. While the timing of this announcement is earlier than we thought, it fits well with the overall direction management/board have undertaken with the appointment of Ruth Porat as new CFO.
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