GOOG to 1200 in 18 months? by Seth Weintraub @FortuneMagazine February 9, 2011, 4:19 PM EST E-mail Tweet Facebook Google Plus Linkedin Share icons Two investors think that Google is the most undervalued of the large cap tech companies. Philip D. Tasho, credit: Tamro Capital Partners Daily Finance quotes Philip D. Tasho, CEO and chief investment officer at Tamaro Capital Partners, and Timothy A. Holland, a principal and co-portfolio manager at that institutional management firm as saying, “We view Google GOOG as the best balance of value and growth in the large-cap technology sector.” Tasho also asserts that over the next 12 to 18 months, Google should bolt to a new high of $1,200 a share. Those are pretty heavy words for a stock that has been largely flat overall since its historical high of 700 in 2007. How does GOOG get there? Numbers: “Tasho uses a price-to-revenue ratio, rather than just price-to-earnings multiple, as a measure of Google’s value and growth indicator. The stock currently trades at a price-to-revenue ratio of 6.7 vs. its historical multiple of 12. At its peak, Google’s p-r ratio was 25. Tasho believes the ratio will jump back up to at least 15, which he estimates would translate to a $1,200 price.” That’s an extremely optimistic view for a more mature company. Facebook may see those types of numbers as it ramps but a mature Google likely won’t. He expects newly appointed CEO and co-Founder Larry Page to “inculcate new passion and spark new energy into the company’s competitiveness, and sharpen Google’s focus on innovation and new technology to further enhance Google’s leadership.” That’s a risk. He could also fall on his face. They think Android is just the first wave in a stream of innovative products in the Cloud. Google has pioneered the Internet display advertising business which is expected to grow exponentially. Clearly, these are extremely optimistic views and there isn’t any enlightening information here which would sway analysts that follow Google. Daily Finance notes that Institutional investors have zoomed in on Google of late. Fidelity Management, which has acquired a 4.66% stake; Capital Research Global Investors, which owns 3.98%; T. Rowe Price Associates, which holds 3.14%; and Vanguard Group, with 2.88% are all expecting big things.