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Pacific Growth Equities Internet analyst Derek Brown sent a note to clients evaluating Google's Q3 results. He has a "Buy" rating on GOOG. Extracts:

Spectacular Q3:05 Results; Raising Estimates Materially; Reiterate Buy Rating

INVESTMENT SUMMARY

• Outstanding Q3 results, with net revs/EBITDA/PF EPS of $1.05B/$672M/$1.51 vs. our ests of $934M/$603M/$1.36 and consensus of $944M/$598M/$1.36
• Raising net rev/EBITDA/PF EPS ests materially to $1.26B/$767M/$1.70 in Q4:05 and to $6.89B/$4.14B/$9.15 in 2006, fueled by pronounced Search marketshare gains among consumers and advertisers
• We reiterate our Buy rating and strongly encourage investors to establish/add-to positions in this extraordinary Company at current levels

VALUATION AND RECOMMENDATION

Google currently trades at a 2006 EV/EBITDA ratio of 19x our estimate of $4.14B and a P/E ratio of 33x our estimate of $9.15. Given the Company’s recent history of extraordinary execution, projected 3-year growth rate of at least 40–50%, and prospects for operational outperformance, we think these represent attractive multiples, particularly relative to other leading Internet franchises. While we recognize possible risks and challenges tied to competition and growth management, among other issues, we continue to see a favorable risk/reward profile for Google at current levels and reiterate our Buy rating on Google’s shares.

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Source: Sell-Side Reaction to Google's 3Q05 Results - Derek Brown, Pacific Growth Equities (GOOG)