Here's what American Technology Research analyst Mark Mahaney has to say about Google this morning, after last night's Q4 earnings release:
Quick comment: His pithy and candid writing style makes a nice change from the usual sell-side drone, no?
Boils down to three factors: 1. Online search growth is explosive -- both in the U.S. and internationally; 2. GOOG is gaining share across the sector; and 3. GOOG is executing very well and keeping operating expenses in line. Also, management comments about seeing no price resistance and being supply constrained were jaw-dropping.
In terms of the stock, we believe investors can make money by buying aggressively at the open. Despite the pending lock-up. And despite the re-launched MSN search engine. Our estimates increase dramatically -- 2005 pro forma EPS goes from $3.70 to $4.46. Our price target increases from $210 to $275 -- 50X our 2006 EPS of $5.54, with a sustainable 30-35% EPS growth rate. Going into the quarter, we believed GOOG had the greatest earnings upside potential among the large cap Net stocks. But we didn't expect the upside to be of this magnitude... GOOG and Yahoo! are our top two Long recommendations.