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GOOG Down Ahead Of Earnings
Stocks are dropping today despite strong earnings reports this morning. Google’s second quarter results will be released tonight after the close. Join us at 4:30 pm ET at SAI for live coverage. Analysts consensus calls for a profit of $6.55 per share (with a range between $6.88 and $6.06 per share) and $5 billion in revenue. Catalysts for the stock include Android and mobile adoption; the release of Chrome operating system this fall; as well as traction in other newer initiatives (social networking, gaming, etc.). The stock trades at approximately 18x 2010 EPS and 14x Enterprise Value / EBIT, inexpensive relative to historical trading levels and the broader Internet group.
Video: Cautiously Looking For The Google Turn Around (CNBC, The Street)
Jordan Rohan, analyst at Stifel Nicolaus, is below the Street on his Google earnings estimates because of the foreign currency impact, changes to Nexus One, and the company continues to invest in mobile and Android, which doesn’t contribute significant revenue (today). James Rogers at The Street believes that sentiment is changing for the search giant, as Google gears up to challenge Apple (mobile, music services). He believes there will be an upside in the stock after today’s results.
Flat Sentiment Indicating Boring Quarter (Seeking Alpha)
Google’s sentiment (based on the Piqqem scale) is relatively flat from the beginning of the quarter through today, pointing to the company delivering lackluster second quarter results. Last quarter, sentiment predicted a marginal quarter and the company in fact delivered a marginal quarter. If you believe the sentiment index, don’t get too excited.
Investors Fear Competition Will Leave Google In the Dust (Smart Money)
Shareholder concerns about Google have been building this year as the stock price has declined 21%. Investors will concentrate on second quarter search ads – a decline from first quarter will be seen as a negative as conversion slows. Newer markets, such as mobile, are also fueling investor anxiety as to whether Google can stay ahead of the competition (Apple).
Options Activity Signally GOOG Trading Above $500 By Friday (Reuters)
Options activity in GOOG suggests about a 4% move in the stock with a moderate upside bias following the earnings report today. The July $500 calls were the most actively traded options, indicating that investors are betting on the stock to rise to $500 by July-options expiration on Friday.
Facebook Won’t Impact Google’s Stock Price; For Now (Forbes)
Investor concerns regarding Facebook destroying Google search won’t deter Trefis from altering its $725 price-target for Google shares. The company estimates that Google search accounts for 67% of the shares value. While increased competition could create downside of more than 5%, it’s not likely to happen within the next 18 months.
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