THE GOOGLE INVESTOR: Stock Rises As Focus Turns To Thursday's Earnings Results

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GOOG off to a good start today, as attention turns to Q1 results (Thursday).
The stock has the potential to break through the $570 resistance today. GOOG has been range-bound ($560 – $570) for the past two weeks, as the market awaits first quarter results. The stock trades at 18x 2010 EPS and 18x Enterprise Value / EBIT.  Potential near-term catalysts include March quarter earnings this Thursday, Android adoption; and benchmarks surrounding newer initiatives, which have mostly been disappointing (Wave, Chrome, Base, broadband network, mobile ads, etc.). As search is maturing, Google has yet to develop a strong second growth engine.

More Wall Street Analysts Weigh In On Growth Potential And The First Quarter

  • Justin Post at Bank Of America Merrill Lynch believes Google’s multiple will expand towards the high end of its 3-year range (12-35x) as the company’s revenue growth accelerates throughout the year. Post also believes that recent channel checks of 15% search growth support his 12% growth estimate for Google in the first quarter. His price-target remains $670.
  • Mark Mahaney at Citigroup believes Google’s first quarter fundamentals remain positive. Mahaney sticks to his long-term thesis that there is significant secular growth ahead for Internet advertising.  In particular, Google is slowly building businesses in mobile, display, and video advertising, is well positioned as a cyclical recovery play, and could increase profit margins. Mahaney reiterates his Buy rating and $640 price-target.
  • This morning RBC analyst Ross Sandler increased his Google estimates to reflect higher than anticipated net revenue growth, growth in paid clicks, and improved revenue-per-click. Sandler believes consensus revenue growth estimates of 15%-16% over the next two years remain conservative. He reiterates his Outperform rating and price-target of $670.

Google Keeps Working On Its Own Tablet (The New York Times)
As competition with Apple intensifies, Google may launch its own variation of the iPad. First glimpses of the gadget were shown back in January, and this device might actually see the light of day soon, according to the New York Times. The proprietary tablet would be another platform for Google’s open-source Android OS, which competes with Windows Mobile 7 as well as the iPhone OS.  Android has gained significant share the past year so a Google-launched tablet device should be able to give the iPad a run for its money.  Though, it’s early days yet.

If The Android Marketplace Were Better, It Might Have A Chance Of Winning Over Disgruntled Apple Developers (Business Insider)
Apple pissed off quite a few developers this week when it changed language in the software development kit for the next version of the iPhone OS. What’s the best way to show Apple how angry you are? Build applications for Google’s competing platform, Android, of course. However, Jay Yarow at Business Insider points out that Android’s version of the App Store, the Android Market, is terrible. So there’s a reason you don’t read about Android app developers becoming millionaires, the way you do with Apple’s App Store. In order to compete more effectively, Google needs to make some major changes.

Co-Founder Brin Has $47 Million Pay-day, Sells Company Stock (The Street)

Google Co-Founder Sergey Brin recently cashed in $47.3 million worth (83K shares) of Google stock according to public filings. To be fair, the reason could be nothing more than to diversify his portfolio, tax reasons, or to invest in some lucky start-up.

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