Buzz Word on Google (GOOG) (GOOGL) Alphabet Re-Org = 'Transparency'

If there is one word Wall Street analysts are using to describe Google's (NASDAQ: GOOGL) (NASDAQ: GOOG) surprise move to create holding company Alphabet, which will separate Google's core businesses and non-Core businesses, it is "transparency."

Below are some examples of the 'transparency' meme in today's research notes:

• Goldman Sachs' Heather Bellini: "While details around how Google will report are still unclear (will cash and capex be broken out, just revenues and expenses on the P&L…), we believe this new operating structure shows their desire to increase transparency which we've highlighted as a key issue for Google to address." Buy rating, $660 price target.
• UBS's Eric Sheridan: "'A Step Towards Greater Transparency'... With today's announcement that Google will be run under a new operating & reporting structure in which the main Google businesses (including search, ads, maps, apps, YouTube & Android) will be distinct from long-term investment areas (including Calico, Nest, Fiber, Google X, Google Ventures & Google Capital), investors will receive greater clarity around the trajectory of core margins vs. future investments. We believe this disclosure will enable investors to more clearly ascribe value to Google, and to the extent that core margin trends are healthier than expected, we believe GOOG can garner higher multiples than it receives today." Buy rating, $750 price target.
• Macquarie's Ben Schachter: "Overall, we think that this new corporate structure is a positive for GOOG investors, as we’ll get more transparency and a better understanding of various key drivers. One near-term concern is that this new structure looks likely to also lead to more resources going toward non-core initiatives (though we think this is a positive for the long term). Additionally, it is too early to understand the potential regulatory and legal impact, but we suspect that it could be meaningful. We also think it is interesting that Larry is acknowledging that they’ve been managing businesses “independently that aren’t very related”. The plan is that this new structure will allow for more focus and better incentives to drive the various core and non-core businesses. We look forward to seeing the improved financial visibility and the new structure’s impact on the growth of both the core and non-core initiatives." Outperform rating, $750 price target.
• Baird Colin Sebastian: "Overall, we believe the decentralized structure could improve accountability, focus, and transparency, all positives as investors view Google's speculative businesses partly as a distraction. Moreover, the move should allow Google and other segments to promote talented employees more quickly, and reduce the risk of turnover." Outperform rating, $720 price target.
• Cantor Fitzgerald Youssef Squali: "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." Buy rating. $720 price target.
• RBC Capital Mark Mahaney: "We view this as a positive step in terms of increasing transparency (especially with regard to core Search/Advertising), boosting efficiency, and putting a strong leader (Pichai) in charge of the core business." Outperform rating, $750 price target.

Shares of GOOGL are up 5.6% to $700 following the news.

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