Analysts Trim Google Inc Targets On Slowing Growth

Google Inc.

shares continued to fall Friday as Wall Street trimmed earnings forecasts in the wake of the company's third-quarter earnings miss. After the bell Thursday the Mountain View, Calif. company told investors that its third-quarter "paid clicks" growth slowed to 15 percent from 25 percent a year earlier, while capital spending of $2.4 billion was slightly higher than expected. Suntrust's Robert S. Peck slashed his target price on Google by nearly 7 percent to $675 from $725, but maintained a Buy rating. "There's no change to the thesis," Peck said, claiming the stock is attractive because of Google's growing core business and reasonable share price. Pressure on Google's shares Friday is likely focused on its slowing rate of growth as well as heavy spending, according to FBR's William Bird, who called recent results "a mixed bag." Bird trimmed his target slightly to $671 a share from $675, but maintained a Buy rating. Revenues were "inline-ish" and spending pressure appears temporary, Bird said. Google remains in an "investment mode, which could keep the shares range-bound in the short-term," according to JMP's Ronald V. Josey, who nonetheless maintained a Buy rating. "It's still among the best-positioned Internet companies," Josey said, citing Google's operations in search, display, video, mobile, and social. "Strong core growth" and the potential for improvements in mobile ad pricing as well as wringing more revenue from Google's Youtube operations motivated Canaccord's Michael Graham to also maintain a Buy rating. Graham trimmed just 2 percent from his Google price target Friday, saying he is profoundly impressed by "the rewards to be reaped from a multi-year, multi-billion dollar obsession with building the ultimate search platform." Google traded down 1.5 percent recently to $528.69 a share.