Ahead of the Bell: Google shares climb

AP News
Posted: Nov 28, 2011 8:23 AM
Ahead of the Bell: Google shares climb

Shares of Google Inc. got a boost in premarket trading Monday after a Citi Investment Research analyst upgraded the online search leader, citing a recent stock price drop and consistent revenue growth.

The analyst, Mark S. Mahaney, upgraded Google to "Buy" from "Neutral." He'd downgraded the stock in mid-April, but Google's stock price has declined since then while its revenue has grown 28 percent, not counting acquisitions.

The company, he added, has also started to show signs that its profit margin is stabilizing, and its stock price value "has become more attractive as estimates have increased while its share price hasn't. This "is essentially the dip we have been looking for," Mahaney said.

Back in April, the analyst had also cited the growing influence of Facebook as a reason for his downgrade. But in the upgrade, dated Sunday, Mahaney said while he thinks Facebook will continue to influence more traffic on the Internet, the company has no intention of getting into the search business. In addition, Facebook's focus is generating demand through display advertising, while Google's focus is on "demand conversion," that is, turning that demand into clicks and purchases through search ads.

Google's shares climbed $15.08, or 2.7 percent, to $578.08 in premarket trading on Monday.

The stock closed at $563 on Friday, down nearly 4 percent since the beginning of April.

A representative for Google could not immediately be reached for comment on the upgrade.