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Google Shares To Skyrocket?

On Friday Sanford Bernstein analyst Jeff Lindsey made a bold call on Google boosting his price to $600. That’s right $600 – an increase of 30%!.

Does he see something that everyone else is missing?

Perhaps, According to Lindsey, improving economic conditions could rapidly translate into higher revenue per click for the company's paid search advertising business.

And he doesn’t anticipate any lag time before the results are noticeable.

He explains that search recovers almost in real time as the economy improves since it does not involve formal contracts and is sold in a real-time electronic auction for search terms.

That could spell big profits.

Those ads, which appear alongside Google's search results, account for a major share of Google's revenue, which totaled $5.51 billion in the first quarter.

Then, what makes this such a bold call?

Google shares are down 31% since last year at this time, on concerns paid search would face pressure in this economy. And to make matters worse, revenue per click has declined as advertisers reduced the bids for keywords in Google's auction-based advertising system.

But that doesn’t faze Lindsey.

"Although revenue per click (RPC) weakness may persist through the second quarter and possibly into the third quarter, we think the trend will reverse by the fourth quarter and restore Google's revenue growth to 14 percent year over year," Lindsay says.

So how much growth?

"I think you’re going to see a few years of solid growth for Google because you have a secular shift of more people going on line. And that trend could last for 3 to 5 years."

Lindsay has an "outperform" rating on the stock.


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Trader disclosure: On May 8th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (AAPL), (TGT), (WFC), (GS), (PCLN), (GE), (SDS), (AGU); Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Finerman's Firm Owns (MSFT) And Is Long (MSFT) Put Spreads; Finerman's Firm Owns (UNH); Finerman's Firm And Finerman Own (WFC) Preferred Shares, Finerman's Firm Is Short (WFC); Finerman's Firm Is Short (IJR), (SPY), (MDY), (IWM), (USO), (BBT); Terranova Owns (XBI), (GENZ), (ABT), (BP); Terranova Is Short (XOM) Call Spread; Terranova Owns (MS) And Is Short (MS) Calls; Terranova Owns (DIS) Call Spread; Terranova Is Short (JPM), (BRCM), (POT), (X), (WYNN), (JOYG), (HES); Terranova Is Short June Crude Oil Futures; Terranova Is Short June Natural Gas Futures

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Virtus Diversifier PHOLIO Owns (IGE), (DBC), (DBV); Virtus Investment Partners Owns More Than 1% Of (ABD), (ARE), (CAL), (DLR), (EPR), (EXR), (IGE), (MEE), (DBC), (DBV), (DBA), (SKT), (UA), (CLB), (WBMD); Virtus Investment Partners Owns More Than 1% Of St Mary Land & Exploration Co; Virtus Investment Partners Owns More Than 1% Of Seagate Tax Refund Rights

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For Jeff Lindsay

Accounts Over Which Bernstein And/Or Affiliates Exercize Investment Discretion Own More Than 1% Of (GOOG)
Bernstein Is A Market Maker In (GOOG), (YHOO), (BIDU)

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