Google Has More Room to Fall - Merriman

Merriman Curhan Ford analyst Richard Fetyko this morning launched coverage of Google (GOOG) with a Sell rating.

Fetyko asserts that GOOG will be among the first stocks to rally when the economy stabilizes, but that there is downside near-term to consensus estimates.

He thinks there will be a better entry point at some point in the next six months. Fetyko contends that the decline in consumer and business purchasing is having “a dampening effect on search engine marketing,” with keyword prices down 5%-30% from the third quarter. Fetyko also notes that traffic to e-commerce sits is down both year-over-year and sequentially, and that click-through rates are on ads are declining as well. He writes that those trends are not yet reflected in consensus estimates.

Fetyko thinks the stock will drop to the $200-$240 level, “which is where we would consider buying it.” Longer term, he says, Google will be “a major beneficiary of the secular shift of advertising budgets from offline to online and mobile channels.”

Despite the negative call, GOOG today is up $4.03, or 1.6%, to $263.59.

This would have been a lot more impressive call when the stock was at $300. Or $400. Or $500. Or $600. Or $700.

Comments

[Muzie:]

Are they been serious?? Saying there's possibly further downside of minimum 8% on a stock that moves 5% every day?? Who is paying these clowns?

2008 Nov 21 11:39 AM

[eternitus:]

A sell rating on GOOG at 12x earnings?

Nothing more than a cheap shot taking aim at stock under pressure as hemorrhage funds are unloading. In January, this stock takes off like a rocket. The lower it goes, the higher it will fly.

2008 Nov 21 11:50 AM

[tginomorebush:]

Savitz IS mr. negative on everything! Just blogs the negatives or the negatives of other bloggers. Never justifies, just looks for a negative and it ends up on alpha...........

2008 Nov 22 08:34 AM

[vaughn:]

3 month t-bill yields circa 0 percent. 10 year treasury note yields 3%, lowest in 50 years. The credit market is forecasting a severe and prolonged recession. The unthinkable of the unthinkable is that Dow could down to as low as 3000.

Yeah, google target price at 240 seems very fat. how about 80 at the end of 2009?

2008 Nov 22 09:16 PM

[investor88:]

I like vaughn's views, ie google 80 at end 2009 [240 seems very fat]. With the severe and prolonged recession, Dow 3000 is possible too.

2008 Nov 23 08:24 AM

[rjbullock:]

If the Dow's at 3,000, we're in another Great Depression. The price of GOOG won't matter much. Safety and having enough to eat will. Let's hope it doesn't come to that...


On Nov 23 08:24 AM investor88 wrote:

> I like vaughn's views, ie google 80 at end 2009 [240 seems very fat].
> With the severe and prolonged recession, Dow 3000 is possible too.

2008 Nov 24 10:58 PM