AmTech Previews Google's (GOOG) Q3 Earnings; Reiterates Buy
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American Technology Research is out with a research note previewing Google's (Nasdaq: GOOG) Q3 earnings, which are expected out tomorrow after the market closes. Google will host a conference call at 4:30pm ET tomorrow. Ahead of the earnings report, the firm reiterates its Buy rating and $480 price target.
The firm believes that Google's results will fall "modestly short" of the Street's current EPS estimate of $4.79, but feels that the report will be "better than feared". AmTech notes that while the paid search model is proving to be very resilient in the current economy, Google's sales are "susceptible to the slowdown in overall ad spending."
Despite currency hedges put in place several months ago by Google, AmTech points out that a strengthening dollar creates a significant headwind for the search giant. AmTech estimates "that every 5% gain in the dollar is roughly $0.31 dilutive to EPS, net of a $0.26 shelter from the hedges." Overall, the firm sees an appreciating US dollar costing Google about $110 million in Q3 sales, about $260 million in Q4 and about $1.3 billion over the course of '09.
AmTech says it is not making a trading call ahead of Google's earnings report as its black box model makes it very difficult to predict revenues with much confidence. The firm said it is "encouraged by curtailment of employee-related expenses, but think Street EPS estimates have to come down." At the same time, AmTech said long-term investors should be buying shares of Google at current levels given its very dominant position and long-term growth potential.
Google, Inc., a technology company, maintains index of Web sites and other online content for users, advertisers, Google network members, and other content providers.
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