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Google’s next stop: $600 a share?
By xaby | June 27, 2007
Happy days at the Googleplex. Shares of Google (GOOG) hit a new 52-week - and all-time - trading high of about $535 on Monday afternoon. The stock is now up 15 percent so far this year and has gained a stunning 529 percent since its initial public offering in August, 2004.
Last week came news that Google (GOOG) increased its market share lead in search over Yahoo! (YHOO), Microsoft’s (MSFT) MSN, IAC’s (IAC) Ask.com and AOL - which, like this site, is owned by Time Warner (TWX).
And of course, Google, unlike Yahoo, doesn’t have to worry about pesky distractions, such as, say, an overhaul of the management team. Instead, Google can simply focus on staying on top in search and bolstering its presence in the so-called display advertising or rich media market, selling things like banners, videos and other non-text based ads.
A desire to become a bigger player in graphical ads was a prime motivation behind Google’s purchase of YouTube last year and agreement to buy ad serving network DoubleClick in April.
So where does Google go from here? Several analysts see another 20 percent upside in the near-term. William Morrison, an analyst with JMP Securities, raised his price target on Google’s stock Monday from $580 to $625.
Morrison wrote in a report Monday that he thinks Wall Street is actually underestimating Google’s growth potential. He currently expects Google to generate revenues, excluding ad sales it shares with affiliates, of $11.8 billion this year, compared to an average forecast of $11.4 billion. What’s more, he is predicting that Google’s sales will hit $16.1 billion in 2008 while the consensus of his fellow Street analysts is just $15.4 billion.
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