×

Handicapping Google Ahead Of Earnings

Google, one of the Street’s most widely owned names, reports earnings Thursday. Considering this was once a $700 stock, how should you play it?

Many investors believe that the search giant is among the best positioned to navigate the ongoing economic turbulence. As a result Google shares have surged 21% in the second quarter.

However, with consumers and businesses pinching pennies it’s widely believed ad spending for the quarter will be less than spectacular and that’s the main source of Google's revenue.

Meanwhile, Google has turned to cost cutting to boost its earnings; the company has jettisoned contractors, laid off a few hundred full-time workers, and has even taken away some employee perks, such as free bottled water.

What should you expect?

On average, analysts surveyed by Thomson Reuters expect Google to earn $5.06 per share on revenue of $4.05 billion

Benchmark analyst Clayton Moran believes Google started to have more trouble selling ads in June after getting off to strong start early in the second quarter. He suspects the adverse conditions will remain through the summer. "No advertising bottom has been reached yet," Moran wrote in a research note on Monday.

ThinkEquity analyst William Morrison echoes many of the sentiments in his own research note. "The path ahead could be a bumpy one," he warns.

And Citi analyst Mark Mahaney says if Google misses the stock will probably correct, however I don’t think that will happen.

What’s the trade?

A miss will be more dramatic for the market, echoes Joe Terranova. I think the risk may be to the downside.



______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment but not have it published on our website send your e-mail to fastmoney@cnbc.com.

Trader disclosure: On July 15th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AAPL), (BAC), (DRYS), (EEM), (FXI), (MON), (POT); Seygem Asset Management Owns (NOK) Calls; Finerman's Firm Owns (BAC) Preferred Shares, Finerman Owns (BAC) Preferred Shares And Owns (BAC); Finerman's Firm Owns (WFC) Preferred Shares And Is Short (WFC), Finerman Owns (WFC) Preferred Shares; Finerman's Firm Owns (CSCO), (MSFT), (YUM), (HPQ); Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM), (CAKE), (CPKI), (USO); Najarian Owns (CSCO) Call Spread; Najarian Owns (GE) Calls; Najarian Owns (JPM) And Is Short (JPM) Calls; Najarian Owns (JPM) Call Spread; Najarian Owns (MCD) Call Spread; Najarian Owns (MFE) Calls; Najarian Owns (MOS) Call Spread; Najarian Owns (MS) Call Spread; Najarian Owns (MSFT) And Is Short (MSFT) Call; Najarian Owns (PALM) Call Spread; Najarian Owns (XLF) Call Spread; Najarian Owns (YHOO) Call Spread; Najarian Owns (DELL) Calls; Najarian Owns (INTC) Calls; Najarian Owns (ORCL) Calls; Terranova Owns (TER), (RIMM), (MSFT), (SUN), (FTO); Terranova Owns (CCE) Calls

GE Is The Parent Company Of CNBC

Terranova Works For (VRTS); Terranova Is Chief Alternatives Strategist Of Virtus Investment Partners, Ltd.; Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO; Terranova Works For (VRTS); Terranova Is Chief Alternatives Strategist Of Virtus Investment Partners, Ltd.; Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO; Virtus Diversifier PHOLIO Owns (IGE), (DBC), (DBV)

Virtus Investment Partners Owns More Than 1% Of (ABD); Virtus Investment Partners Owns More Than 1% Of (CBL); Virtus Investment Partners Owns More Than 1% Of (CAL); Virtus Investment Partners Owns More Than 1% Of (CLB); Virtus Investment Partners Owns More Than 1% Of (DLR); Virtus Investment Partners Owns More Than 1% Of (EXR); Virtus Investment Partners Owns More Than 1% Of (IGE); Virtus Investment Partners Owns More Than 1% Of (MEE); Virtus Investment Partners Owns More Than 1% Of (DBC); Virtus Investment Partners Owns More Than 1% Of (DBV); Virtus Investment Partners Owns More Than 1% Of (DBA); 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; Virtus Investment Partners Owns More Than 1% Of (SKT); Virtus Investment Partners Owns More Than 1% Of (TNB); Virtus Investment Partners Owns More Than 1% Of (UA); Virtus Investment Partners Owns More Than 1% Of (WBMD)

For Dennis Gartman:
Gartman Owns (AA)
CIBC Gartman Index Owns (AA), (K), (GIS), (X)

For Zachary Karabell:
Karabell Owns (IBM), (GOOG)

For Mark Mahaney:
Employees Of Citi Own (GOOG)
Citigroup Global Markets Or Affiliates Owns 1% Or More Of (YHOO)
Citigroup Global Markets Or Affiliate Received Non-Investment Banking Compensation From (GOOG), (YHOO) In Past 12 Months
(GOOG), (YHOO) Are Or In Past 12 Months Were Clients Of Citigroup Global Markets (Non-Investment Banking, Non-Securities Related And Non-Investment Banking, Securities-Related)
Citigroup Global Markets Is A Market Maker In (GOOG), (YHOO)