ThinkEquity analyst William Morrison Tuesday morning abandoned his bearish position on Google (GOOG), raising his rating to Buy from Source of Funds, and upping his price target to $550 from $400.
Back in February, Morrison turned bearish on the stock, asserted that consensus estimates were too high. It was a bad call: the stock has since move up from around $356 when he turned negative to $469 at yesterday close. “While we believe our fundamental thesis played out as expected, we clearly got the stock wrong,” he writes. The upgrade Tuesday, he adds, reflects expectations that Google is likely to outperform as the economic cycle turns.
Morrison says he now sees GOOG meeting or beating consensus estimates for the next several quarters.
He expects EPS of $22.09 this year and $25.39 next year, ahead of the Street at $21.71 and $24.70.
Two other items of note on GOOG:
- Piper Jaffray analyst Gene Musnter Tuesday morning said new data from ComSCore shows the company’s worldwide search share in July increased to 67.5%, up from 67.1% in June, and an all-time high. The data, he writes in a research note, suggests the company is headed for a “solid” third quarter. He also writes that Microsoft Bing so far has had little impact on Google’s global dominance of the search business.
- Taking a more cautious approach today on GOOG is the Wall Street Journal’s Heard on the Street column. A piece Tuesday contends that there are “some worrisome parallels between Google today and eBay in 2005-06, as the online-auction company’s growth was faltering.” The column contends that “with Google’s medium-term revenue growth likely to fall toward 10%, it is hard to justify paying 25 times 2009 consensus earnings, including the cost of employee stock options. Google may itself discover the next Google-like business. But until it proves that case, investors may want to wait for the stock to retreat.”
GOOG Tuesday is up $3.25, or 0.7%, to $471.98.