free html hit counter The Analysts on GOOG - John Battelle's Search Blog

The Analysts on GOOG

By - September 28, 2004

happytraderCo-lead underwriter CSFB says GOOG will hit $145.

From The Street’s coverage:

Contrasting with mixed reviews for Google already published by analysts from firms that didn’t participate in Google’s IPO, CSFB’s report, along with initiations from fellow joint book-running manager Morgan Stanley and underwriters Thomas Weisel Partners, WR Hambrecht and J.P. Morgan, all assigned Google ratings equivalent to a buy.

GOOG responded with a rally, up more than 6 so far today to $124.

Mary Meeker, who I interviewed here and who will speak at Web 2.0, also came out with a positive report on the company. From her report:

Initiating coverage on Google with Overweight-V rating – Google has helped change the direction of the Internet and has built impressive market share and an especially strong business model.  We believe Google should continue to help pace the growth in the still early-stage online search market and benefit from related revenue growth.  Google shares could have upside as implied by a variety of valuation methodologies, most notably our DCF, discussed beginning on page 56.

Estimating strong financial results for C2004E and C2005E – We forecast net revenue growth of 93% and 60% in C2004E and C2005E, respectively, with 76% and 42% operating income growth (excluding stock compensation expense) driving estimated levered free cash flow of $394MM and $908MM in C2004E and C2005E, respectively. 

Her report is, as usual, very comprehensive, and I’m still reading through it. But I have to say, it reads well, in the meta view – she mentions that Google is well positioned to be the front end to audio and video content (as I’ve said before, TiVo + Google = VOI), and ends her opening section with this very Web 2.0 passage:

Particularly, with the launch of Gmail, we became intrigued at the possibility that Google could create a distributed computing model layered over user-generated content. Right now users can have 1GB of webmail storage—but with potentially tens of thousands of servers, and commensurately cheap storage space, we wonder about the possibility of Google providing a thin application “desktop” that resides on the browser, where users could jot brief notes (GWord?), do basic calculations (GExcel?), and of course, search. The April 2004 registration of gbrowser.com by Google could lend some credibility to this line of thinking. Ultimately, we believe the company could have a significant opportunity ahead of it in Search / Find / Obtain well beyond the Google.com domain.

Now the hard part – execution – begins.


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4 thoughts on “The Analysts on GOOG

  1. Maybe Google should start a religion. They can call it G-anetics.

  2. ID:entity says:

    I’ve posted this idea on the site before but either nobody is picking it up, maybe its just me, or maybe nobody is listening…

    Bio-Tech……will make search / portal revenue (if you must) look like small change folks, very small change.

    Do not under estimate these guys…you’ve been taking then for granted for far too long….and that’s exactly where they want you (Bill & Terry.)

    The Google Web 2.0 business model was covered sometime ago, heavens knows what’s really under the bonnet.

    Hey everbody is entitled to a rant!

  3. ID, not sure if you’re referring to the biotech industry in general (in which case it already dwarfs the ppc space) or some connection Google might have to biotech (which would be news to me).

    Please explain,

    Chris

  4. ID:entity says:

    I started here:
    http://www.google.co.uk/corp_gov/board.html

    then went here:
    http://www.gene.com/gene/products/education/

    So I guess what I’m getting at is could Google be using its resources (top scientists & a really big computer) to help in the development of cures for all kinds of diseases….well I’d like to think so.