Saturday, October 22, 2005

Count Us In: Raising the Google Price Target

King Google, oh how we love thee.

On Friday morning, we wrote about Google's explosive 3rd quarter.

Clearly, every analyst across Wall Street felt compelled to raise his or her price target after the mind-numbing blowout.

So late Friday, we rolled up our sleeves, crunched the numbers, and came to the same, simple conclusion: Google is going higher.

Much higher.

We expect Googles' share price to pass the $375 mark by year end.

We have a long-term $450 price target on shares, assuming GOOG can sustain its torrid growth.

The online advertising space is growing at the tune of 30% -- Fact!

Google's success embodies the inefficiencies of print media and the blazing growth of paid search.

Lastly, Google seems to make money no matter what what the macro picture looks like -- cyclicality and seasonality are NOT in its lexicon.

Investors are paying multiples as high as Googles for companies with slower growth.

That's insane.

What's more important for investors to look at is not the dollar amount of Google's stock price but what Google's valuation is relative to its peers. And on that basis, Google still looks reasonably attractive, if not cheap.

GOOG looks to be the company that deserves the premium right now.

It has reported stronger gains in sales and earnings than Yahoo! since Google has more exposure to the online advertising market, specifically where key words are concerned.

As long as online ad spending doesn't take a sudden sharp turn downward, it's hard to imagine Google's stock losing ground.

Internet advertising is in its infancy. The long-term prospects for Google are quite strong.

There is only one Google -- and it deserves to trade higher than the rest.

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