Google and Price Targets

At the beginning of the year, Safa Rashtchy of Piper Jaffray put a $600 price target on shares of Google (GOOG). The stock responded by shooting up $21 to $435. Some of us were tempted to laugh. Actually, we gave into our temptation and laughed quite a lot. Two days later Mark Stahlman at Caris & Co. put a $2,000 price target on Google. This nearly killed us.
As you would expect, the stock immediately plummeted below $340, and stayed below its high for much of the year. But recently, the search engine has caught fire again. In later-October, the stock got all the way up to $492, and now it’s settled in the $470ish range.
Google is going for about 35 times earnings, and if you follow the PEG ratio stuff (which I don’t), then the shares are just about in line with the projected growth rate of 32.5%. Well, Google could be a good buy at some point, but I’d like to see the shares fall back down again before making a move. I’m guessing the path $2,000 will be harder than the path to $450.

Posted by on November 10th, 2006 at 11:28 am


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