Is Google Recession-Proof?

Google (GOOG) may be the world's most popular search engine, but it's also resistant to a possible U.S. recession, says Canaccord Adams analyst Colin Gillis in a research note to clients.

Mr. Gillis, who maintains a "buy" rating on the stock with a $755 price target, wrote:

Given current concerns of a U.S. economy in recession, we highlight Google as a U.S. recession-resistant investment idea based on 1) continuing reallocation of advertising budgets to measurable mediums such as the Internet and 2) Google’s international exposure, which provided 48% of revenue in September quarter.

Google's fundamental services such as search and Internet advertising as well as its expanding footprint as a provider of non-search applications will also bode well as the company gets ready to announce its quarterly earnings on Jan. 31, said Citigroup Capital Market's analyst Mark Mahaney.

Mr. Mahaney said:

We are looking for $3,455MM in revenue (up 55% Y/Y and 15% Q/Q) and $4.44 in non-GAAP EPS (excluding stock based compensation). This compares with consensus expectations of $3,441MM and $4.44.

Mr. Mahaney maintains a "buy" rating on Google with a $775 price target.

Comments

[Tom B:]

I'd still rate GOOG a "buy". We may see some earnings growth from the Doubleclick deal, also, which could provide extra "recession resistance".

2008 Jan 30 08:55 AM