RBC Analyst: Wait to Add Positions to Google

Google Inc. (GOOG) remains on track to meet its second quarter based on preliminary search engine marketing checks conducted by RBC Capital Markets.

However, don't expect Google stock to gain much as a result, says analyst Ross Sandler, thanks to summer seasonality and the economic backdrop.

In a note to clients, Mr. Sandler said there is little evidence Google will miss analyst expectations after conversations with several search engine marketing firms pointed to on-target spend through the first half of Google's second quarter.

The analyst said spend on a same account basis appears flat for April/March and year-over-year is up around 10% to 20%. Given these search trends and impact from a full quarter of DoubleClick., he told clients his 24.6% year-over-year U.S. gross revenue growth estimate could be conservative.

However, although Google remains his favorite long idea in the large-cap domestic Internet segment, he suggested investors wait for the mid-summer pullback before adding to positions.

Mr. Sandler wrote:

Despite comments from management in the first quarter 2008, we don't think any company is immune to more deceleration, as the weak economy translates into lower budget growth.

Our thesis for Google has been to wait for pull-backs to add to positions, and we continue to believe that investors may see better entry points below current levels over the next few months.

Mr. Sandler raised his price target on Google shares from C$550 to C$600, and left his "outperform" rating unchanged.

Comments

[sunrises]

Hi Trading Desk,

Great to see your article. Most would luv to add or average down on lower entry points. Except, the recent crunch and margins - most would like to see volatility on the upside first into the $620s+before seeing the lower entry points as little cash is there for even a small purchase.

[sunrises]

Google is a real value as it's the best search engine.

[TradeProfit]

Hey Trading Desk:
GOOG just jump $80+ dollars to $530 and flew over $600, that was 4-17-08 at $450. Technically $550 is the strong support level, never believe analyists, their talk is so cheap ! his wait for pull-back is profitless without merits.