RBC Capital Markets raised its target price for Google (GOOG) - Get Report on Tuesday, as a former Schwab SoundView analyst assumed coverage of the search-engine phenomenon and other Internet stocks.

New RBC analyst Jordan Rohan issued a report Tuesday dubbing Google his top pick and assigning a price target to the stock of $235.

That price is $90 higher than RBC's previous target for the stock -- which RBC had previously rated sector perform -- and it's also $35 higher than the target that Rohan had on the stock before he departed from SoundView, which is now owned by UBS.

Rohan's new price target is now the highest among Wall Street analysts for the stock, according to

Reuters

data. The $235 target edges past the $225 mark set by Credit Suisse First Boston's Heath Terry. Other members of the $200-plus club include Goldman Sachs' Anthony Noto, who has a $215 target price, and American Technology Research's Mark Mahaney, who is aiming for $210. Both CSFB and Goldman were underwriters of Google's IPO.

Behind these targets is optimism about Google's prospects for growth and continued investor demand for its shares. But other investors cite the risk of increasing competition in the search market -- particularly from

Microsoft

(MSFT) - Get Report

-- as well as the steady increase in Google's freely tradeable shares, which could diminish the effect that Google's small float has had in pushing up the stock price.

Google's shares, which went public in August at $85 apiece, were trading Tuesday at $195.69, up 63 cents.

Among other Internet stocks, Rohan initiated coverage on auction giant

eBay

(EBAY) - Get Report

with an outperform rating and a price target of $130, and on smaller search firm

FindWhat.com

(FWHT)

, with a sector perform rating and a $20 price target.

Rohan also picked up coverage of

Yahoo!

(YHOO)

and

Ask Jeeves

(ASKJ)

from RBC analyst Stephen Jue, who will be focusing on ecommerce stocks. Yahoo! -- shares in which fell 27 cents Tuesday to $36.05 -- has a price target of $42 and an outperform rating; Ask Jeeves is rated sector perform. (RBC hasn't done any investment banking for any of the stocks Rohan is covering.)

Asked why he bumped his target price for Google from $200 to $235, Rohan attributes his increased optimism to Google's prospects in Western Europe.

"The European paid search market is going through the same accelerated growth period that the U.S. market went through two years ago," Rohan says. Additionally, says Rohan, Google has the biggest share of search queries in 17 of the 20 biggest markets outside of the U.S. "It's only a matter of time before that translates into a No. 1 revenue position in sponsored search," says Rohan.

The growth of the international Internet is one of four investment themes that Rohan sees as playing out over the next three to five years. The top trend, he says, is the shift toward online advertising, particularly search. Citing a variation on a statistic that online ad boosters have cited for years, Rohan writes in a Tuesday note that Internet users spend about 15% of leisure time using the Internet, but the medium has captured only 3% to 4% of the $250 billion in annual U.S. ad spending.

A third trend is growth in combined offline/online promotions and what's known as "rich media" advertising -- online ads that incorporate animation or moving video, often with audio.

The fourth theme, according to Rohan, is cheaper and more accessible broadband connections to the Internet, which are expected to increase the volume of search and e-commerce activity.