Deutsche Bank Sees Google In The Sweet Spot

Deutsche Bank issued a research note on Google Inc. GOOG Wednesday and felt the stock is in “the sweet spot” representing quality at a reasonable valuation.

A Buy rating was maintained with a $645 price target.

Analysts led by Ross Sandler felt that “Google is as well-positioned as any for the on-going platform shift to mobile, with many new revenue lines vs. the PC era, and at 19x 2015 EPS vs. its 20 percent CAGR and other mega-cap techs, GOOG sits in a sweet spot.”

Sandler noted that “unlike most consumer internet companies that will provide FX-impacted guidance for 4Q, Google’s backward looking results and call are likely to be largely upbeat. We continue to view Google as a must-own name in any Internet book, but in contrast to last year this time, don’t expect a dramatic move on 3Q results.”

The firm updated its “model for current FX rates, which has a very modest reduction to 3Q, but meaningful impact to 4Q where we are now 2 percent below consensus for revenue. Our $645 PT is based on 20x PE, 13x EV/EBITDA, and a 4.5 percent target FCF yield on 2015.”

Google Inc. traded at $532 in the premarket, down 1.10 percent.