Piper Jaffray Adds Google (GOOG) to Alpha List

Piper Jaffray adds Google (Nasdaq: GOOG) to its Alpha List, meaning it sees appreciation of at least 5% over the next 90 days as a result of a near-term catalyst or market event. The firm maintains its Buy rating but lowers its price target on Google from $806 to $785.

The firm sees two specific potential catalysts that will boost Google's price in the second half of the year:

• as shares are down 18% over the last 3 weeks, Piper believes the market is betting that Google's September quarterly results may not meet expectations. However, the firm remains convicted that Google will be able to report in-line with the Street estimates as it feels that investor concerns regarding a slowdown in organic UK growth are overblown. Notably, Piper estimates that "a 10% miss in estimated UK organic growth equates to a 0.7% revenue miss and a 1% EPS miss to Google's overall numbers."
  
• Google has said that it expects the Yahoo! (Nasdaq: YHOO) search deal to begin in October and Piper sees the collaboration adding 12% to Google's U.S. search ad market share. If the deal ultimately passes DOJ scrutiny, the firm believes Google could control over 80% of the U.S. search ad market.

The firm lowered its FY08 and FY09 EPS estimates from $20.14 and $25.14 to $19.61 and $24.23, respectively. The Street is currently estimate FY08 EPS of $19.64 and FY09 EPS of $24.07.

Piper points out that over the last three years, Google has traded up an average of 30% from September 9 to December 31, meaning that by year-end, the stock could be trading around $550.

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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