Nomura On Google Vs. Apple

Nomura analyst Anthony DiClemente commented on Google Inc GOOG GOOGL and Apple Inc AAPL Wednesday.

DiClemente noted that “Google has always been the default search engine in Apple’s Mobile Safari browser on the iPhone and iPad, but according to an article recently published by The Information, that agreement may be up for renewal in early 2015.”

It is assumed that “Yahoo/Microsoft is pitching Apple for this business.”

The firm “attempted to quantify the implications to Google if the Google/Apple relationship were to be severed, however likely or unlikely this may be.”

"While a separation could create headline risk and disruption for Google users on iOS platforms, we believe it would result in a relatively contained financial risk of roughly $2 to 2015E EPS of $29.17,” according to the analyst note.

Applying a 22x target 2015E P/E multiple would result in a ~$47 (~7 percent) decrease in the firm’s $640 target price.

DiClemente estimated CY14E EPS at $25.77 and CY15E EPS at $29.17.

Google Inc recently traded at $501.49, down 0.09 percent.

Apple Inc recently traded at $107.60, up 1.26 percent.