A new report from Bernstein Research published today, April 2nd, suggests that Google Inc (NASDAQ:GOOG) revenue streams are not well understood and significantly undervalued. Bernstein rates Google a Buy and reiterates their $1,500 target for the technology titan. An excerpt from the overview of the report highlights their key arguments.

Google Worth

“Google’s stock trades at 17 times 2015 GAAP EPS (ex-net cash) despite the fact that revenues and EPS are expected to grow north of 20% in 2015. The discount versus companies with similar performance is explained by the lack of clarity on how the Interne, the Web…will evolve, and the fact that much of the value will be created in the “out years.” We think…the discount is excessive for several reasons. First, we estimate that Google Inc (NASDAQ:GOOG)’s well established businesses, search, YouTube and the Ad Network alone justify a 17% premium to Google’s current enterprise value, even if they decelerate significantly to account for the “lack of clarity” about the future. Second, we believe there is at least $210/share upside…from new and emerging businesses, which already have hundreds of millions or a few billion dollars in revenue such as Google Play… Third, the evolution of the Internet and the Web will generate many new opportunities… Google has under-appreciated, hard-to-replicate, and distinctive resources and skills that make it more likely to benefit than to suffer from these opportunities and disruptions.”

Google’s Core businesses

Bernstein Research analysts Carlos Kirjner and Peter Paskhaver argue the cash flows from Google Inc (NASDAQ:GOOG)’s major businesses, Search, YouTube and the Google Network add up to around $390 billion in enterprise value or ballpark $1,150/share. The analysts also emphasize that their valuation conservatively projects that all these businesses decelerate after 2014 given growth and competition.

Google's Emerging business

Google Play, Compute and App Engine and Apps for Enterprise and Government add value

The report also highlights that Google Play and Google Inc (NASDAQ:GOOG)’s apps businesses are growing rapidly, and assign them a value of at least $70 billion. That adds up to more than $210/share, with Google Play alone valued at $120/share.

Future opportunities

Kirjner and Paskhaver also mention that besides the significant possibilities of other known initiatives such as Google Fiber, Google Glass and self-driving cars, the company also has its finger in the pie in a number of other areas. The report mentions parallel and distributed computing, artificial intelligence, including machine learning for speech, image and video processing, natural language processing, operating systems, telematics, digital cartography, network security, cryptography and of course robotics.