July 18, 2015
Google, GOOG, Shares Gap-Out On Earnings, Price Target Upgrades

Class C shares of Google Inc. (NASDAQ: GOOG) gapped-out of a two-year trading range today, after the company reported blow-out earnings last night. Highlights included strong sales of $17.7 billion, up 11 percent year over year and earnings per share of $6.99, well above the $6.71 consensus among analysts who follow the technology behemoth.

GOOG shares are trading up $84.18 or 14.52 percent, to $664.17 as of 1:15 p.m. Over eight million GOOG shares have traded hands, more than 4 times its daily average. Shares opened the day at $649.07 and traded as low as $642.00 before quickly taking off again. Prior to today, the highest price the shares had ever seen was $603.17 on April 2, 2014.

Research Firms Raise GOOG Targets

GOOG shares received widely-followed share price upgrades by a host of research firms. The Street has reported that Doug Anmuth with JP Morgan has raised his price target for GOOG to $800 and sees the shares reaching that level by December 2016. Victor Anthony with Axiom has changed his rating on GOOG shares from hold to buy and raised his price target to $850. Anthony sees the shares reaching $850 by December 2016. Jeffries has raised its target for GOOG to $800 on what it is calling "significant" revenue growth.

Shares of individual stocks tend to follow the major averages to some degree. The technology-laden Nasdaq Compsite Index sits at fresh all-time highs, finally surpassing bubble-era 2000-levels. Other technology stalwarts like Facebook (NASDAQ: FB), Netflix (NASDAQ: NFLX) and Tesla (NASDAQ: TSLA) sit at or near all-time highs. If GOOG traders and traders in names like the above want to send stocks higher, they certainly have the wind at their backs.

General Market Tailwinds

Kevin Marder, who famously called the top of dot-com bubble, currently says, "Path of least resistance for the Nasdaq is up."

While Google no longer has the ability to grow its earnings at the rate of Facebook, Netflix, or Tesla, analysts are telling investors not to discount GOOG shares as long-in-the-tooth quite yet. Google reported solid 11 percent revenue growth this quarter, and analysts are calling for revenues of $18.56 billion next, which would be a 41 percent year over year increase.

If Google can continue to grow its sales and actually meet or beat these impressive sales targets, as analysts believe they can, and apparently the market concurs, GOOG shares may be able to mount a new uptrend and continue to trade into new high territory.

Both Google Class A (GOOGL) and Class C (GOOG) shares are available. They are both liquid, however, the Class A (GOOGL) shares carry one vote while the Class C (GOOG) shares carry none. Class B shares also exist but are not traded publicly.

[Photo Courtesy of WC]