Google (GOOG) Is The Lone Bright Spot After Strong Q3 Results

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October 16, 2009 11:49 AM EDT

Search giant Google (NASDAQ: GOOG) is the lone bright spots today after blowing away sky-high Wall Street estimates for its third quarter and pointing to even better times ahead. Wall Street was impressed with the improving price per click trends and revenue re-acceleration. An army of analysts raised their price targets and estimates on Google following the results. Shares are up 4.4% currently to $553.38, a new 52-week high.

Google reported Q3 EPS of $5.89, ex-items, versus the analyst estimate of $5.40. The EPS number from Google also beat the 'street high' EPS estimates of $5.68. Revenue for the quarter rose to $4.38 billion, which compares to the estimate of $4.23 billion. Revenues were up 7% year-over-year despite the tough economy.

CEO Eric Schmidt commented, "While there is a lot of uncertainty about the pace of economic recovery, we believe the worst of the recession is behind us and now feel confident about investing heavily in our future." On the conference call, the company said they will start stepping-up hiring, particularly in engineering and sales. Google also said they will focus more on acquisitions.

Analysts at Goldman Sachs were so impressed with the results and the tone of the conference call that they raised their price target from $585 to $635, while sticking with their Buy rating. Goldman said revenue re-acceleration is firmly under way, especially overseas.

While Goldman was bullish, analysts at Canaccord Adams was the 'uber-bull' and raised their price target to a new 'street high' $700. Canaccord Adams technology analyst Jeff Rath called it a "Huge" quarter for Google and he is bullish on the prospects for a strong fourth quarter as well.

Other bullish notes were from Piper Jaffray (623 tgt), FBR Capital, Morgan Stanley ($625 tgt), Bernstein ($650 tgt), Barclays Capital ($620 tgt), Susquehanna $625 tgt, UBS ($635 tgt), Jefferies ($600 tgt), Broadpoint Amtech ($610 tgt), Thomas Weisel ($620 tgt), Kaufman Bros ($645 tgt), Brigantine Advisors ($650 tgt), Benchmark ($625 tgt), among others.

The average price target on Google is now up to $620.62, which some suggest may still be too conservative. One trader told StreetInsider.com, "The Street is too scared to get extremely bullish on Google. These price target should be much-much higher. I would say $1000 is not unrealistic as growth is back. They're wimps"

UPDATE: Click here to see some highlights from the company's Q3 conference call.

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