Google on the Rack

Bulls were quick to trot out their well-worn defenses of the stock.

"That's the case with any high-growth company," UBS analyst Benjamin Schachter, who rates Google neutral, wrote in response to the Barron's scenario. The article "rehashes many well-known risks," he says.

Other Wall Street analysts also came to Google's defense. Citigroup's Mark Mahaney today reiterated his buy rating on Google and $490 price target. He sees the March 2 analysts' meeting and the likely inclusion in the S&P 500 as catalysts for the stock. Citgroup has provided investment banking services for Google in the past 12 months.

"Google's fundamentals remain very strong," he writes in a note to clients. "They are far-and-away the best fundamentals in the industry."

The company's stock may benefit from the March 2 analysts day and its likely inclusion in the S&P 500, Mahaney says.

The Barron's article came less than a week after two Wall Street analysts, Scott Kessler of Standard & Poor's and Stifel Nicolaus' Scott Devitt, raised their ratings on Google shares to hold from sell. Phillip Remek of Guzman & Co. is the only Wall Street analyst who officially rates Google shares sell.

After spending a year and a half being bowled over by all things Google, observers are starting to change their tune. Even at reduced levels, the stock is up 300% on its August 2004 initial public offering, and most Wall Street analysts still consider the stock a buy, targeting a price north of last month's all-time high.

Still, the stock's descent over the last month has been pronounced. Google reached the all-time high of $475 on Jan. 11 before starting a mild dip. The stock then traded at $432 before the company's Jan. 31 release of disappointing fourth-quarter earnings restarted the selloff in earnest. On Monday, the shares dropped $15.53 to $347.08.