Bloomberg columnist Mark Gilbert reports this morning that only one analyst covering Google recommends selling the stock:
Philip Remek is either the bravest equity
analyst on the planet, or the craziest.
There are 35 soothsayers covering Google Inc., the Internet
search company whose stock has risen more than fivefold since it sold
shares in August 2004. Seven have a "hold" rating, while 27 have
the company as a "buy," according to Bloomberg data.
Remek, who works for Guzman & Co. in Coral Gables, Florida, is
the only one advising clients to sell. Google currently trades at
about $470 a share, for a market value of almost $140 billion. Remek
calculates the stock is worth just $260.
This is a value investing site, so I wouldn't go near Google stock. I'm sure some traders have done well with it, but it's not my game. (I should add that I don't engage in shorting stocks, and I'd be scared to death to short Google.)
Someone in Barron's pointed out a few months ago that Google's market cap was more than enough to buy BOTH Disney and News Corp.
Would any private buyer really pay more for Google than those two companies? Call me crazy, but I sure wouldn't.
And this may be a good time to remember that, just the other day, Bloomberg reported most stock market analysts were wrong in their recommendations last year.
So Mr. Remek being outnumbered 34 to 1 doesn't seem so crazy after all. At least for those of us with a long-term view.
Speaking of value investing and the prices private buyers might pay, I noted last week that GOOG's market cap had just exceeded that of Berkshire Hathaway.
-Motts
Posted by: Motts McGregor | January 12, 2006 at 09:37 AM
Motts,
Well, this all brings to mind what Graham said about the market in the short term being a voting machine and in the long term a weighing machine.
I know some traders have made a bundle owning Google stock. More power to 'em. Just not my thing.
Thanks for reading.
Posted by: John | January 12, 2006 at 10:46 PM
But wait,
Henry Blodget just put a $100 price target on Google, so make that two bearish analysts. Wouldn't that also argue that GOOG will keep increasing in price? Really, don't know what any of it means so maybe we should seek confirmation from Jack Grubman.
Posted by: jr | January 13, 2006 at 05:03 PM
jr,
Great point!
Posted by: John | January 13, 2006 at 11:03 PM
Great post! I compared the cash flows and market capitalizations of Google (GOOG) and Microsoft (MSFT) yesterday:
http://www.stokblogs.com/node/128#comment-52
During the trailing twelve months, MSFT generated $13.8 billion in cash flow whereas GOOG generated $1.5 billion. MSFT makes 9x the amount of cash, yet MSFT's market cap is only $289 billion vs. GOOG's $137 billion. In other words, Microsoft is worth just twice as much as Google even though it makes 9x more money!
Posted by: Theo | January 14, 2006 at 10:30 PM
Theo,
Great observation.
Posted by: John | January 15, 2006 at 11:14 PM