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