Google shares to hit US450: analyst By Paul Thomasch October 24, 2005 GOOGLE shares could hit as high as $US450 ($601.50) after rocketing to an all-time high in the US on Friday on impressive quarterly results and brokers upgrades.
Google shares closed at $US339.90 on the Nasdaq, up $US36.70, or 12.1 per cent, bringing its market capitalisation close to $USUS100 billion, a mark held by only two other Silicon Valley companies - Intel Corp and Cisco Systems. The company's earnings report on Thursday surpassed Wall Street expectations for the fifth straight quarter since its initial public offering. Behind the results was what the company called a "sea-change" shift by major companies to online marketing from print and broadcast. Although Google has long been a hot spot for users searching for everything from news to long-lost friends, some have questioned whether the company can turn its popularity into steady advertising dollars. Its earnings report appeared to put those questions to rest - at least for now. "They've come up with a new product that is changing the way people are advertising," said ThinkEquity analyst John Tinker. "They are changing the way people are doing business." Before the stock market opened on Friday, analysts quickly issued another round of Google upgrades. Among those, Needham boosted its price target to $US370 from $US300 a share, while Banc of America Securities increased its target to $US360 from $US280. First Albany and Lehman Brothers went further, upping their price objectives to $US450 a share. Google, whose stock is now up nearly 340 per cent from its initial public offering 14 months ago, had hovered around the $US300 level since June. Other Internet stocks also got a boost from the rally, with Chinese Internet company Baidu.com Inc. adding 6 per cent to $US70.00 and U.S. Internet marketing company aQuantive Inc. seeing its shares rise 7.9 per cent to $US21.25. "Google's earns may reaffirm that tech is not dead," said Tim Biggam, chief options specialist at options brokerage Man Securities. "Google earnings may provide the impetus for a year-end rally in Nasdaq." Google said third-quarter net income rose to $US381.2 million, or $US1.32 per diluted share, from $US52.0 million, or 19 cents a share, a year earlier. The prior quarter included a noncash charge of $US201.0 million to settle a patent dispute. Gross revenue jumped 96 per cent to $US1.58 billion. Analysts, on average, had projected revenue of $US1.46 billion. "I think people are going to look at the Internet again even if they have been burned in the past," said Mark Herskovitz, manager of the Dreyfus Premier Technology Growth Fund. "From a historic perspective, I would say that it is not uncommon for new technologies to emerge and for investors to become overly enthusiastic, which is what happened with Internet round one, and then become unduly pessimistic after their initial expectations were not realized," added Herskovitz. The $US2 billion fund owns 170,000 shares of Google. While Wall Street welcomed the upside surprise, some also raised questions about the company's visibility. Merrill Lynch analyst Lauren Rich Fine wrote in a research note that Google had a "great" quarter but surprises "cast some doubt on management's ability to predict its own business."
