Shares of Google Inc GOOGLGOOG opened gap-down Thursday amid back-to-back bad news. Stifel downgraded Google from Buy to Hold and Bloomberg published a report highlighting how the search engine giant is losing its market dominance.
However, not everyone on the Street has given up on Google. Scott Kessler from S&P Capital IQ was on CNBC to discuss what makes Google a great buy right now.
Ratings Aren't Straight Forward
Kessler began by stating that the situation deserves to be further analyzed, “Well, I think we have to kind of parse that [Stifel’s downgrade].”
“So, in terms of from a company perspective, I think it’s fair to say that Google faces pretty significant challenges and headwinds right now. In terms of the stock, I mean, the shares had a pretty difficult 2014, given that the stock was actually down last year in an up market with a lot of internet stocks performing pretty well,” he continued.
“We actually see Google as a pretty nice value opportunity right here and we have a Strong Buy recommendation on the shares.”
Why Is Google A Buy?
When asked why he sees Google as a buying opportunity right now when the company’s shares underperformed in an up market last year, Kessler replied, “So I was always taught that you buy low and sell high. So, our view at this stage is [...] people are obviously concerned; they have seen a number of these kind of developments or speculative updates.”
“The stock has obviously not reacted well and people now are kind of re-evaluating Google.”
Bottom Line
He continued, “The reality is: you highlighted a couple of hundred basis points narrowing in market share, but Google still -- according to the data you referenced -- has three quarters of the market.”
“This sounds somewhat like a minor issue that’s being exaggerated with a significant decline in the stock right now.”
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