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Thursday, August 18, 2005
WSJ says Google is cheap (GOOG)
Kevin Delaney's Heard on the Street column in today's Wall Street Journal quotes three portfolio managers who believe Google (ticker: GOOG) stock is cheap. The key point: Internet growth is faster outside the US, Google's market position is stronger there, but so far it hasn't fully monetized its non-US business. Mr Delaney writes:
...Google offers its service in over 100 languages and says the majority of its search queries come from outside of the U.S. In May, the company handled 73% of all searches in Germany, 62% of all searches in France and 55% of all U.K. searches... That compares with 48% of all U.S. searches in June. Yet, despite being stronger in some key markets abroad, just 39% of Google's revenue was from international operations during the second quarter. Last week, it announced it had teamed up with three Chinese resellers for its ads.
Also, Google could easily generate revenue from popular services that are now ad-free, such as its Google News service and mapping products. Google Maps and the site for its related Google Earth application had 13.3 million U.S. users in July...
The three portfolio managers quoted think Google's stock is worth $320-350, with one manager calling it "extremely cheap". Full article here (paid subscription required).
Comments
When considering the prospects for Google, it might be worthwhile to keep in mind that, according to Zacks, 17 of 24 analysts (71 percent) already rank the stock with a "buy" rating. At the IPO the Street hated the stock and now that it has tripled they love it...
Posted by: Nick Perry | Aug 18, 2005 3:02:57 PM
That's always the way, eh, Nick? No one wants to be the last one to the party OR the first. I'm still happy with the growth prospects, but as I posted on my blog I'm very curious about why the secondary is being done right now -- are they just keeping quiet about acquisition targets (and lying about their existence?), or do they really have that much capex in mind? That pays for a lot of engineers, servers and office space, even if they keep handing out the big $$ founders awards.
Posted by: One Guy | Aug 18, 2005 3:57:11 PM
I don't have any special insight into the timing, but I wish I did One Guy! I think it will be very interesting to keep an eye on what happens here. The Street is already firmly in the bullish camp and as you say "no one wants to be the last one to the party". Downgrades are like cracks in a dam... |
