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The Google Effect

Ah, to be a hot Internet stock! It's like 1999 all over again, to judge by Wall Street insiders' reaction to Google (Nasdaq: GOOG)'s about-face yesterday. You might think that Google's disappointing fourth-quarter results, in only its fifth quarter as a public company, would ring bells with tech-sector analysts mindful of the irrationality that pervaded the sector in the bubble years. But then, you would be wrong.

Investors stampeded in the opposite direction: Google shares today lost seven percent of their value, or about $13 billion in market capitalization. They're 15 percent off their highs, and they dipped below $400 for the first time since last November. Has that scared off analysts? Hell, no! Look at some of the price targets from analysts surveyed by The Wall Street Journal (subscription required):

  • UBS's Benjamin Schachter downgraded Google to Neutral from Buy, lowering his price target to $425 from $500.

  • Stifel Nicolaus's Scott Devitt maintained a $400 Fair Value estimate.

  • Harris Nesbitt's Leland Westerfield lowered his price target to $513 from $545.
And those are just the bears. Others are more sanguine:

  • Prudential's Mark J. Rowen raised his price target to $500 from $400.

  • CIBC's Paul Keung put his target price at $520.

  • Bear Stearns' Robert S. Peck kept his Outperform rating and target price of $550.

  • And the most bullish of all, Piper Jaffray's Safa Rashtchy, has an Outperform rating and a $600 price target on Google.
Where's Henry Blodget when you need him?

— Richard Martin, Senior Editor, Unstrung

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