Although Google stock has risen sharply since the summer, nearly tripling the rise in the S&P 500 during the same period, one analyst thinks the tech company is now a less compelling opportunity for value investors. Still, he does see it as a name to own for growth investors.
Following a 39-percent surge in Google's share price since June 14, the stock's price-to-earnings ratio has risen to about 17x from 12x. This has sparked a change in investor sentiment, according to a new research report from BMO Capital Markets. The firm's analysts downgraded the stock to "market perform" from "outperform," but maintained a $790 price target on its shares.
"That should be interpreted as saying this is a core holding, but it's not something we'd put new money to work in right now," said Daniel Salmon, an analyst at BMO Capital Markets. "Instead we'd maybe look elsewhere to do that and instead look for a better entry point on Google."