10/22/07 - AC Research
NEW YORK, October 22 (newratings.com) - Analyst Henning Wagener of AC Research reiterates his "accumulate" rating on Google Inc (GOOG).
According to AC Research’s research note dated October 19 and published this morning, the company has reported its 3Q07 earnings results. In that period, Google was able to grow its sales revenues from $2.69 billion in the year-ago quarter, to $4.23 billion. Not considering payments to partners, sales reached $3.01 billion. Net earnings at the same time improved 46% to $1.07 billion, while adjusted earnings per share reached $3.91.
The published results were ahead of the estimates, the analyst mentions. In this context, Google benefited from an increasing tendency towards internet advertising. Continuing expansion as well as the introduction of new products further supported the company’s growth. Currently, Google is in a position to grow four to five times faster than the competition of Yahoo or Microsoft, thus expanding its rather positive market position. Recently, Google expanded its core business by radio, print, TV, and online video advertising, placing its revenues on a broader basis.
Basically, the company’s prospects are bright, AC Research believes. An important current issue at Google is the penetration of the mobile phone market, which has been further pushed with the acquisition of Finnish software corporation Jaiku. The market for advertising via mobile phone will be offering some massive growth rates over the next few years. Therefore, it seems likely that Google will be able to achieve a rather good position in that market.
At Thursday’s closing price of $639.62 and a 2007 P/E ratio of about 41, the company’s stock still seems to enjoy a rather moderate rating, considering the continuing high potential for growth. A possible continuation of the economic downturn in the US might constitute a certain risk element, something that might have a negative impact on the online advertising market.
AC Research reiterates its "accumulate" rating on Google.
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