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Citigroup Internet analyst Mark Mahaney sent a note to clients evaluating Google's Q3 results. He has a "Buy" rating on the stock. Extracts:

High Risk (H) GOOG: Fundamentals Getting Stronger And Stronger

* Google reported a Very Strong Beat Quarter -- $1,049MM net rev and $1.51 EPS vs. $944MM/$1.36 Street. In what should have been a seasonally challenging quarter, these results were especially impressive.

* Fundies got stronger -- Y/Y revenue growth of 108% (vs. 110% in June), and EBITDA margin up 20 bps Y/Y to 64.1%, despite significant investments. Proforma EPS growth of 131% Y/Y. What's especially impressive is that this growth is ALL ORGANIC. Still, the best fundies among the Net leaders.

* We are significantly more positive -- 2006 proforma EPS goes from $7.33 to $8.23. Our PT goes from $375 to $430, based on 42X our 2007 proforma EPS estimate of $10.37, which we believe is conservative.

* With the three leading Net stocks having reported Q3, secular growth appears strong across the board. We would be buyers of GOOG at the open. GOOG is now entering its two seasonally strongest Qs. And S&P 500 catalyst remains.

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Source: Sell-Side Reaction to Google's 3Q05 Results - Mark Mahaney, Citigroup (GOOG)