Friday, November 04, 2005

GOOG Edges Past Target

A couple of weeks ago just about every analyst on Wall Street raised his or her price target on Google after the company reported its best quarter ever; we couldn't help but join the chorus.

On 10/22, we wrote that "King Google" was going 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. There is only one Google -- and it deserves to trade higher than the rest.

This morning, we raised our long term Google target to $500.

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