Google hit a 52-week high earlier this week, but the stock fell 3% Wednesday and was down another 2% Thursday on no particular news.
Are these ominous beginnings of a Google swoon? After the 94% gain for the stock last year, it's a reasonable concern.
Analysts like Merriman Curhan's Richard Fetyko say no, this may be the kind of reset that investors appreciate.
"All indications I'm getting is that search-ad spending was very strong in the fourth quarter," Fetyko wrote in an email.
In a note Thursday, Fetyko raised sales estimates 19% for Google's fourth quarter 2009. Citing strong search traffic growth and ad price increases, Fetyko now predicts that Google will report fourth quarter sales of $4.86 billion, which is up from his prior forecast of $4.77 billion.
Fetyko reiterated his buy rating and lofty $750-to-$800 price target on Google.
The research note comes during a busy week for Google.
Earlier on Thursday, Google agreed to add $26 million in cash to the $106 million worth of stock it is paying for the acquisition of Web video-compression shop
. The deal was expected to close late last year, but On2 shareholders felt they were owed more money given the 35% increase in Google's stock price since the deal was struck in August.
, an Android-powered "super phone" that it will sell directly to consumers and telco subscribers at carriers like
Google's Nexus One phone
Some investors have worried that Google's first -- and only -- venture into gadgets may have an adverse impact on profits, possibly spoiling its partnerships with phone makers like
But by Wednesday, those concerns diminished when Google's Android effort got a huge boost. The lone U.S. holdout in the Android front,
selling by July. The phones will come from Motorola,
and PC giant
-- Reported by Scott Moritz in New York