Joe Terranova: Earnings Gives Google Momentum to Break Out
”Impressive all the way around,” says trader Karen Finerman. “Google is cash machine. They do it quarter after quarter. I’m on for the ride. It’s an extraordinary business.”
That was Finerman's gut reaction after parsing through Google's third-quarter results which trounced Wall Street expectations as good cost controls helped boost the Internet search leader's profit by about 26 percent.
”Now, I’d look at the technicals," counsels Joe Terranova. "In the last 3 years Google has only taken out the 200-day 5 times. $559 is now the 200-day. I expect Google to trade above that level and that's bullish. I think the path is higher for Google.”
Piper Jaffray Analyst Gene Munster is also bullish but for fundamentals. “There’s a shift in how people access the Internet and Google is in a good position. That’s positive for the price target.”
"I'm a buyer if the stock pulls back to $582 - $585 over the next little bit," adds Jon Najarian.
”I’m always the wet blanket,” says Guy Adami, but Adami thinks the path of least resistance is lower. He reminds the desk that Google has demonstrated a pattern of trading higher in the days after they report only to later trade down.
”If you’ve enjoyed the $100 rally in a week or so, not only would I take profits but north of $600, I’d think about going short,” Adami says.
Adami isn't the only wet blanket. Trader Stephen Weiss is pretty wet. He says "stay away and wait for the stock to settle down. And don't use Google as a read through for other companies that benefit from advertising revenues. It's a special company."
By the numbers, Google said its net income in the three months ended September 30 grew to $2.73 billion from $2.17 billion in the year-ago period.
Excluding certain items, Google said it earned $9.72 per share in the third quarter. Analysts polled by Thomson Reuters I/B/E/S were expecting adjusted EPS of $8.74.
Third-quarter net revenue, which excludes fees that Google shares with partner web sites, increased 37 percent year-on-year to $7.51 billion. Analysts were looking for $7.22 billion in net revenue.
Also Google said that it had signed up more than 40 million users for its recently launched Google+ social network, a data point that investors took to mean it was competing with rival Facebook.
Hear more about Google earnings from Piper Jaffray Analyst Gene Munster. Watch the video now.
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Trader disclosure: On Oct 13, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Najarian owns long call spreads AMZN; Najarian owns long call spreads AAPL; Najarian owns long call spreads GOOG; Najarian owns long call spreads RIMM; Najarian owns long call spreads WHR; Najarian is long CME; Najarian is long CBOE; Najarian is long CIGX; Adami Owns (AGU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Terranova is long vrts; Terranova is long lqd; Terranova is long MUB; Terranova is long FCX; Terranova is long TBT; Terranova is long OXY; Terranova is long HOS; Terranova is long F; Terranova is long LULU; Terranova is long CAT; Terranova is long AXP; Terranova is long AAPL; Terranova is long OIH; Terranova is long EMC; Terranova is long WFC; Terranova is long IBM; Terranova is long Silver Dec $40 puts; Finerman owns AAPL; Finerman owns BAC; Finerman owns GOOG; Finerman owns JPM stock leaps & puts; Finerman owns GDX; Finerman owns MSFT; Finerman’s firm owns AAPL short calls; Finerman’s firm owns MSFT; Weiss is long NIHD; Weiss is long JPM; Weiss is long QCOM; Weiss is long SSO; Weiss is long KO; Weiss is long RIMM; Weiss is long HPQ
For Brian Stutland
Stutland owns GOOG short puts
Stutland Equities is a market maker holding hedged positions in VIX futures and options
Stutland Equities is a market maker holding hedged positions in VXX stock and options
Stutland Equities holds hedged positions in SPX options and SPY stock and options
For Dan Berenbaum
For Gene Munster
The following companies have been investment banking clients of Piper Jaffray during the past 12 months: ACOM, DANG, DRIV, MOBI, YNDX, YOKU
Piper Jaffray expects to have the following companies as investment banking clients within the next three months: YNDX, YOKU
Other material conflicts of interest for Gene Munster or Piper Jaffray regarding companies in my universe for which I am aware include: ACOM, DANG, DRIV, MOBI, YNDX, YOKU: underwriting
Piper Jaffray received non-investment banking securities-related compensation from the following companies during the past 12 months: ACOM, DRIV
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