Will Google (GOOGL) Stock React to This Analyst Note Today?

NEW YORK (TheStreet) -- Shares of Google (GOOGL) are slightly up 0.45% to $530.39 in early market trading Thursday, as analysts at Citigroup issued a note on the global technology company this morning on the possibility of losing the contract with Apple (APPL) as its default search engine for the mobile Safari browser, set to expire in 2015.

Citi analysts said Google's shares at current levels are largely pricing in the potential loss of its default search agreement with Apple's mobile Safari browser.

Citi also noted that Google has underperformed its Internet index since mid-October, but maintained its "buy" rating with a $652 price target.

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Citigroup says investors are increasingly concerned after Apple recently switched its mobile search provider for Siri and Spotlight to Microsoft's  (MSFT) Bing from Google.

Separately, TheStreet Ratings team rates GOOGLE INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate GOOGLE INC (GOOGL) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 28.1%. Since the same quarter one year prior, revenues rose by 20.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • GOOGL's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 4.03, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has increased to $5,994.00 million or 17.92% when compared to the same quarter last year. Despite an increase in cash flow, GOOGLE INC's average is still marginally south of the industry average growth rate of 25.78%.
  • GOOGLE INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GOOGLE INC increased its bottom line by earning $37.91 versus $32.47 in the prior year. This year, the market expects an improvement in earnings ($51.59 versus $37.91).
  • You can view the full analysis from the report here: GOOGL Ratings Report

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