Google Inc. shares fell more than 6 percent on Friday after the company's quarterly results disappointed the most bullish on Wall Street, and some analysts cut price targets on the stock.
Analysts also highlighted concerns about Thursday's announcement that CEO Eric Schmidt will no longer address investors on quarterly earnings conference calls. In a research note, Stifel Nicolaus analyst George Askew called Schmidt's absence "troubling."
"The investors think it's significant, it generates another layer of speculation, puts another log on the fire for the bear case," said BGC Financial analyst Colin Gillis. "People are concerned there's something wrong."
Chief Financial Officer Patrick Pichette, denying any internal rift, urged investors not to read beyond the fact the company was trying to "streamline" the process.
Google posted a 23 percent jump in revenue as Web advertising rebounded. But it fell short of the most bullish expectations on Wall Street and investors had grown accustomed to seeing blowout results from the Web search and ad leader.
Stellar results and optimistic commentary from Intel Corp. executives buoyed tech stocks this week.
"The reaction reflects expectations climbing beyond what was reported," said Pacific Crest Securities analyst Steve Weinstein. "The numbers were very good and point toward positive momentum for the business. I don't think there's any longer-term issue about it though."
At least four brokerages, including BofA Merrill Lynch, raised their price targets on Google.
But Barclays Capital analyst Douglas Anmuth cut his price target on Google to $650 from $675, but kept his "overweight" rating.
"A significant revenue driver beyond core search has not materialized, and it's becoming tougher for the company to beat numbers," Anmuth said.
Kaufman Bros analyst Aaron Kessler also cut his price target on the stock to $725 from $740 as he lowered his 2010 and 2011 profit estimates due to higher expenses. The analyst expects expenses to be more front-end-loaded this year and said expense growth would moderate.
Still, Kessler maintained a "buy" rating on the stock and said valuation remains attractive.
"Cost-per-click trends and margins will pressure the stock near-term, which we see as a buying opportunity, as we believe Google remains the best play on the online ad recovery," Jefferies & Co analyst Youssef Squali said in a note to investors.
He raised his price target on the stock to $710 from $695 and reiterated a "buy" rating.
BofA Merrill Lynch analyst Justin Post expects share price gains to be driven by the emerging display network business, YouTube monetization and a potential reacceleration of core growth.
"Google should begin to generate significant revenues from alternative sources beyond search this year, with display advertising and YouTube monetization the biggest near-term opportunities," Post said.
He raised his price target on Google to $685 from $670 and maintained a "buy" rating.
Susquehanna Financial Group raised its price target on the stock to $755 from $735 and maintained a "positive" rating.
MKM Partners analyst Tim Boyd raised his target on the stock to $600 from $570, but maintained a "neutral" rating, expecting increased regulatory risk to weigh on stock sentiment.
Recent media reports have suggested an increased likelihood of a Federal Trade Commission challenge to Google's proposed acquisition of AdMob, an important player in mobile advertising, Boyd said.
Mobile advertising is of particular importance to Google's long-term growth strategy and the loss of AdMob would serve as a significant setback, the analyst said.
Google shares were down 6.36 percent at $557.40 on the Nasdaq.
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