Google Poised to Breakthrough $500

April 19, 2007 at 3:11 pm  ·  Category: Stocks

After today’s excellent earning’s report, Google (NASDAQ: GOOG) finally looks poised to breakthrough $500 and settle above that level.  Google has flirted with $500, closing above it 3 times around last Thanksgiving and twice this January but has been been unable to hold that level – as can be seen in this 6 month chart of Google

But with another blowout quarter today, including 63% revenue growth and $1 billion in net income, Google might just have won over its skeptics – especially following Yahoo’s dismal performance on Tuesday. 

From a valuation standpoint, Google really isn’t all that expensive.  If we assume 35% free cash flow growth this year (it was 39% last year) Google will earn $3 billion in 2007.  With an enterprise value of $130 billion that’s a forward multiple of about 43 – not all that expensive for a company growing revenues, income and free cash as fast as Google is. 

UPDATE (Fri 4/20, 11:50am PST):

A bunch of analysts have raised their price targets for Google following yesterday’s earnings report:

Piper Jaffray: $660, from $630

ThinkEquity Partners: $620, from $600

Lehman Brothers: $610, from $560

Merrill Lynch: $590, from $560

UBS: $580, from $560

Needham: $575, from $537

Posted by Greg Feirman  ·  Trackback URL  ·  Link
 

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