Nothing like coming late to the party!
Henning Wagener...and being right/wrong?
Google initiated with "sell"
Monday, October 03, 2005 2:06:05 PM ET
AC Research
NEW YORK, October 3 (newratings.com) â Analyst Henning Wagener of AC Research initiates coverage of Google Inc (GOOG.NAS) with a "sell" rating. The 12-month target price is set to $290.
With more than eight billion searched websites, more than one billion pictures and around one billion usenet messages, Google Inc is currently the largest search engine worldwide.
According to AC Researchâs research note dated September 29 and published this morning, Googleâs success is mainly due to the PageRank method developed by the company as a sophisticated and superior search algorithm. This enables Google to list the most relevant results for all queries practically within a few seconds, the analyst says.
In 1H05, the company still netted 98.8% of its total turnover earnings through advertising, the analyst mentions. Thus, Google is significantly dependent on the further development of the advertising market, AC Research points out. The analyst expects the US internet advertising market to grow by at least 20% annually over the next few years, and Google to profit significantly from this development due to its outstanding market position and extremely effective placement of ads. At the same time, the cyclical nature of international spending on advertising is a significant risk, the analyst adds. In case an alternative provider succeeds in programming a search technology superior to that used by Google, the company might rapidly lose market share, AC Research elaborates.
Googleâs stock has been rated using two different evaluation models, the analyst says. The Peer Group comparison establishes a fair value per share of $346.57, while the DCF model leads to a fair value per share of $250.15, the analyst mentions.
AC Research weighted the result of the Peer Group comparison with 40% and the result of the DCF model with 60%, arriving at a 12-month target price of $290. Given the companyâs current share price of $313.94, Googleâs stock has a downside risk of 7.63%, the analyst mentions.
AC Research initiates coverage of Google with a "sell" rating.