As GOOG flirts with $600 this morning, analysts are weighing in and raising forecasts.
Jordan Rohan of Stifel Nicolaus set the tone and raised his price target from $600 to $650:
Justin Post from Merryl Lynch Bank of America raises his price target from $640 to $710:
Morgan Stanley’s Mary Meeker raises her price target to $700 with a few bullet points:
- Impressive CQ3 results – Net revenue growth of +25% Y/Y (vs. +25% / +24% Y/Y in CQ2 / CQ1) was impressive + ahead of our / street estimates of +20% Y/Y, and suggests the secular recovery in online advertising continued. Adjusted EBITDA of $3.3B (+18% Y/Y and 60% margin) came in ahead of expectations. Operating EPS (excluding stock-based compensation) came in at $7.64, above our / consensus estimates of $6.67 / $6.68.
- Strong / accelerating underlying metrics – Domestic gross revenue grew +26% Y/Y, stable vs. CQ2 levels. On a constant-currency basis, UK revenue accelerated to +19% Y/Y from +17% Y/Y in CQ2 and revenue from the rest of the world accelerated to +26% Y/Y from +25% Y/Y in CQ2. Paid clicks growth accelerated to +16% Y/Y, ahead of our +14% Y/Y estimate and +15% Y/Y in CQ2. Cost-per-click (CPC) growth was strong at +3% Q/Q, ahead of our estimate of +1% Q/Q.
- Non-search businesses reaching scale faster than expected – Google disclosed for the first time that the display advertising and mobile businesses were operating at $2.5B / $1B annualized gross revenue run-rates, respectively. Based on our math, display and mobile could generate ~10%+ of Google’s gross revenue in the next 12 months. Based on this momentum, Google’s investments in these areas are clearly beginning to pay off.
- Reiterate Overweight rating with DCF of $700 – We are raising our net revenue (ex-TAC) / Operating EPS (ex. stock-based compensation) estimates due to the strong growth in paid clicks / CPC as well as momentum in display and mobile advertising. Our CQ4E net revenue / adjusted EBITDA / Operating EPS (ex. stock comp.) go to $6.01B / $3.66B / $7.75 (from $5.80B / $3.56B / $7.54). We are also increasing our C2011E net revenue / adjusted EBITDA / Operating EPS (ex. stock comp.) estimates to $24.85B / $15.00B
Citi upped their price target over $100:
Deutsche Bank’s Jeetil Patel:
Southridge’s Brian Bolan says:
William Blair’s Meggan Friedman:
Colin W. Gillis at BCG Partners, still relatively bearish:
Douglas Anmuth at Barclays Capital gets back out in front and raises target price $125 to $675:
And finally, James Mitchell at Goldman Sachs GS raises target from $625 to $700
And some observations from the cheap seats: The more Google talks about its “wacky but noble” car and windmill adventures, the less it is worried about shareholder revolt. These “non-core” business exploits could be seen as signs that Google is financially healthy.