BMO Capital Downgrades Google (GOOG) to Market Perform; Easy Gains Seen

February 4, 2013 7:27 AM EST
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Price: $806.07 --0%

Rating Summary:
    53 Buy, 7 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 7 | Down: 8 | New: 1
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BMO Capital downgraded Google (NASDAQ: GOOG) from Outperform to Market Perform but maintains a $790 price target saying the "wall of worry" has been climbed.

The firm notes shares of GOOG is up 39% since June 14, 2012 versus the S&P 500's gain 14%.

"Since mid-June, GOOG has climbed a "wall of worry" as the market becomes comfortable with cost-per-click declines (and Motorola) and the stock's forward non-GAAP P/E multiple has moved from ~12x to 17x," analyst Dan Salmon. "This makes it a less compelling opportunity for value investors, and we also believe the benefit of growth investors rotating out of AAPL in recent months could begin to abate."

Besides a pullback in the shares, the analyst said they would get proactive again if: "1) new Motorola products are greeted positively after Google works through the 12-18 month backlog it inherited (potentially in 2H13); 2) we see more dynamic YouTube monetization, or; 3) a return of capital to shareholders, though we continue to view this as very unlikely."

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 $775.60 yesterday.

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