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Google (GOOG) Has Only 5% Downside and 40% Upside, Says Deutsche Bank

January 30, 2015 9:01 AM EST
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Price: $152.26 +0.21%

Rating Summary:
    41 Buy, 6 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 0 | Down: 0 | New: 0
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Deutsche Bank maintained a Buy rating on Google (NASDAQ: GOOG) and raised its price target to $625.00 (from $615.00). Comments follow Q4 results. Analyst Ross Sandler thinks the bear case is "misguided" and the worse is behind for Google.

"Google missed consensus revenue and EPS by 2% and 4% respectively, mostly a result of FX and a few one-time expense items. More importantly, the growth rate for Websites revenue ex-fx accelerated 300bps Y/Y, Websites paid clicks accelerated Y/Y (and 5pts on a 2-year basis), and UK growth accelerated modestly, all pointing to stable core search growth," said Sandler.

"Management offered a slightly-more-friendly rhetoric around the pace of investment in 2015, stating that it plans to “balance growth and discipline, and throttle back”. We think the bear case is misguided and the worst is likely behind Google. At 14x 2016 consensus EPS, we see 5% downside and 40%+ upside from current levels," continued the analyst.

"In contrast to most Google conference calls, the overall tone felt a little more shareholder friendly, with comments like “we care about our stock price” and “we balance growth and discipline” which may end up being over-emphasized here, but we suspect there is an effort underway to improve employee morale through a higher stock price. The bear case around “everything looking like the UK” appears to have dissipated a bit in 4Q, with the UK up very modestly, but more importantly, overall websites growth ex-fx re-accelerating (clicks and
revenue)," he added.

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 $510.66 yesterday.



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