Over the next week 24/7 Wall St. will set mid-year price targets (June, 30, 2007) for the sixty most widely traded stocks. These targets will be based on past price performance, industry activity, forward projections of financial performance, outside analyst opinions, and research conducted for doing past articles on these firms. The price targets assume flat markets over the next six months. In other words, if the Nasdaq moved up 25% between now and mid-year, the target share price targets would probably be too low. If the market moved down by 20%, they would probably be too high.
Google (GOOG). Over the last year, Google’s stock has actually done no better than the Nasdaq index. Over two years, the stock is up about 150% compared to the Nasdaq’s nearly 20% rise. Despite the fact that Google has almost half of the search market, there are clear concerns that the companies rapid growth is beginning to decelerate. Researchers forecast that Google’s revenue will grow 70% in 2006 after growing 90% in 2005. That rate is likely to low further in 2007. And, there is a growing body of evidence that Google’s rising rates are causing some of their customers to curtail spending. There is also some chance that Yahoo!’s new Panama initiative to challenge Google in the keyword search engine advertising market may actually take share.
Factors that could move the stock above target: Google’s new initiatives including YouTube could bring in more revenue than expected. Google’s effort to broker advertising for radio and newspapers could be a quick success.
Factors that could move the stock below target: Dissatisfied customers drop spending or move to Yahoo! or MSN. Or, Google’s growth rate could be below Wall St. estimates.
Douglas A. McIntyre can be reached at email@example.com. He does not own securities in companies that he writes about.