Wednesday, January 19, 2011

Google's (NASDAQ:GOOG) Risk/Reward More Balanced Says Barclays

While Barclays sees Google's (NASDAQ:GOOG) fourth quarter earnings report beating their net revenue projection, they see Google as having moved into a more balanced risk/reward position.

Barclays says, "We believe Google will report 4Q results that are likely to beat our +10.8% Q/Q net revenue projection on what we believe were strong holiday sales, fast growth in display and mobile, continued CPC increases in key verticals, and solid paid clicks growth. Our sequential net revenue projection compares to consensus of 10.5% Q/Q and what we believe are buyside expectations closer to +13%.

"However, since the November 30 Groupon/EU investigation/weak Euro-induced low in the stock, Google shares are up 15% compared to the S&P 500 up 10% and we think the risk/reward specifically into earnings has become more balanced.

"At $640, shares are trading at 19.0x our 2011E PF EPS of $33.71 and 16.6x our 2012E PF EPS of $38.62. Our $675 price target is based on 20x our 2011E EPS of $33.71."

Barclays reiterates an "Overweight" rating on Google (GOOG), which was trading at $633.07, down $6.56, or 1.03 percent, as of 1:56 PM EST. Barclays has a price target on Google of $675.

No comments: