Piper Sees Google at $600

Hopes are higher for GoogleGOOG in 2006.

Piper Jaffray jacked up its price target on the stock Tuesday to $600 from $445, saying the search engine is its top large-cap pick in the new year. The $600 forecast is 50 times Piper's new pro forma 2007 earnings estimate of $11.91 a share. Its old forecast applied the 50 multiple to a 2006 pro forma estimate.

"Although such a high multiple may seem aggressive, we believe that given Google's dominant position in an already large yet still rapidly growing market, its phenomenal brand power, and its status as a technology leader justifies such a valuation," Piper said. The brokerage also predicted that 2007 earnings estimates will rise this year.

Piper, which maintained an outperform rating on the stock, said Google should continue gathering market share in 2006 and benefit from a strong pipeline of new products.

"We believe Google is an iconic company that, like MicrosoftMSFT and eBayEBAY before it, has defined a new and vital industry. Such market leading technology companies have traditionally traded with peak valuations in the 50-time to 60-times [earnings] range," Piper wrote.

The shares were up $7.38, or 1.7%, to $422.24 early Tuesday.