Google to $1000? Not Everyone Agrees...

February 22, 2013 4:09 PM EST
Get Alerts GOOG Hot Sheet
Price: $806.07 +0.18%

Rating Summary:
    53 Buy, 7 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 13 | Down: 22 | New: 54
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With Google (Nasdaq: GOOG) stock trading at an all time high, clearly the search giant is turning heads on Wall Street. In fact, on Thursday a number of analysts raised Google’s price target to a whopping $1000 per share, implying a 25 percent pop relative to the stock’s current $800 price. Animal spirits, it seems, have taken over.

However, as Apple’s (Nasdaq: AAPL) dramatic fall from grace illustrates, über bullish Wall Street sentiment is indeed a bold fickle friend.

While few can deny Google’s massive led in search and the growing power of its Android operating system, an argument against Google can be made based on its high valuation. With this in mind, analyst Brian Wieser of Pivotal Research today made a compelling augment against Google $1000. Wieser downgraded the stock from Buy to Hold February 7th and on Friday followed up with additional arguments to support his case.

“We believe that Google can increase its revenues at a double digit pace for many years to come. Unfortunately, costs will likely rise much faster,” predicted the analyst.

“This is largely because many new company initiatives which are intended to protect the durability of the core paid search business are not themselves very high margin activities. At the same time, we think underlying trends suggest margins weaken over time as the company becomes larger, as it continues to invest in facilities, and as it becomes increasingly dependent on partners such as Apple and the rest of the Android ecosystem as well as on other web publishers whose inventory Google will aim to sell,” said Wieser.

So, while $1000 is a seemingly achievable milestone, especially consider the company’s impressive growth, gravity might eventual regain control over the stock. As Apple investors know very well, on Wall Street gravity and margin weakness are often synonymous.

For an analyst ratings summary and ratings history on Google click here. For more ratings news on Google click here.

Shares of Google closed at $795.53 yesterday, with a 52 week range of $556.52 to $808.97.

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