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After a Long Gallop, Is Google Winded?


Google (GOOG) is turning out to be a stock for all seasons. In up or down markets, in good or bad economic times, the world's No. 1 Internet search engine keeps pulling ahead. Google went public in 2004 at 85 a share. By early 2006 it stood at about 330. And on Nov. 7 it zoomed to a high of 747.24. But it has since slipped, to 648.54 on Nov. 21, so the big question is whether Google has peaked. Its many fans think such an idea is nonsense. Of 37 analysts who track Google, 33 tag it a buy. None rates the stock a sell. Google's "40%-50% growth rate gives it a category-killer status, so we think the stock will hit 1,200 in 2009," says Georges Yared of Yared Investment Research, which owns shares. His bold forecast is based on his 2009 earnings estimate of $29 a share on revenues of $29 billion, up from his 2008 estimate of $21 on $16.8 billion, and 2007's $15.60 on $15.6 billion. William Harnisch, president of Peconic Partners, which bought shares at 98 in 2004, hasn't sold any stock and buys more during dips. He sees Google hitting 880 in 12 months as it adds an array of new products to sustain its growth. Google is developing software for mobile phones, he notes, to broaden its markets. Jeffrey Lindsay of Sanford C. Bernstein (AB), who rates Google outperform, says that online advertising won't be much hurt by an economic downturn, "which is looking increasingly likely."

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

Clean Diesel Technologies (CDTI) may become a big player in emissions control. The tiny outfit, specializing in cutting nitrogen oxide and particles in the exhaust from diesel cars and trucks, has licensed its technology to two makers of emission-control products, Tenneco (TEN) and Germany's Robert Bosch. William Relyea of investment firm H.C. Wainwright rates Clean Diesel a strong buy: He believes the company's valuation is likely to rise as its licensed products are adopted and the potential for high-margin revenue streams becomes more visible. He thinks the stock, now at 14.91, will climb to 35 in a year. Paul Cornelius of JMFinn Capital Markets in London says the "investment thesis for CDTI remains robust," with the global focus on vehicle emissions. CDTI, he adds, offers "considerable upside."

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

Cytori Therapeutics (CYTX) has a novel twist on stem cells: Its Celution System extracts them from an adult's own fat tissue (the procedure takes an hour) and injects the cells into the same patient in a variety of medical situations, including reconstructive surgery and heart disease treatment. Stephen Brozak of WBB Securities (it did banking for Cytori), who rates Cytori a strong buy, says fat tissue provides a high-yield source for stem cells and other regenerative cells. The cells extracted by the Celution System, approved for use in Europe and Japan (not yet in the U.S.), are comparable but not identical to bone marrow-derived cells, says Brozak. He thinks Cytori stock, now at 5.25, will climb to 7.20 in a year. Edward Tenthoff of Piper Jaffray (PJC) expects the Food & Drug Administration to O.K. the U.S. use of Cytori's Celution by yearend.

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.


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