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Eye on Equities

Investors skeptical as analysts boost price targets on Google Add to ...

While somewhat overshadowed by news that co-founder Larry Page will step into the CEO role, Google Inc. reported blockbuster fourth-quarter results late Thursday, beating Street estimates on both profit and revenue.

Today, analysts have been busy hiking their price targets on the stock, and one of the most bullish is Canaccord Genuity's Heath Terry, who raised his forecast by $50 (U.S.) to $800.

"Fourth quarter for Google showed the kind of accelerating growth that we expect to continue as ad dollars shift online, Google continues to gain share in search, mobile drives significant growth in usage, and display becomes more meaningful," Mr. Terry wrote in a note to clients. "While the management reshuffling adds a minor degree of uncertainty, we believe Google has significant price performance catch-up ahead."

He raised his fiscal 2011 earnings per share estimate to $34.73 from $34.11.

Other price hikes come from Goldman Sachs (to $720 from $700); Deutsche Bank (to $725 from $650) and UBS (to $780 from $735). Reaction from analysts to the news of Mr. Page taking the reigns from Eric Schmidt was generally favourable.

But investors appear to be less encouraged, with some apparently skeptical that Mr. Page will be able to rejuvenate the technology giant when he takes over in April. Google shares were down just over 2 per cent on Friday.

The winter oil and gas drilling season is off to a stronger-than-expected start, pointing to favourable financial results ahead for Precision Drilling Corp. , according to BMO Nesbitt Burns Inc. analyst Michael Mazar.

Mr. Mazar bumped up his 2010 and 2011 earnings estimates for Precision, contending that continued strength in North American drilling activity will enhance Precision's earnings growth profile and provide a catalyst for further valuation expansion.

Upside: Mr. Mazar raised his target by $2 to $13, noting this implies a reasonable 6.3 times estimated 2012 earnings before interest, taxes, depreciation and amortization.

Freeport McMoRan Copper and Gold Inc. beat analyst earnings and sales estimates for the fourth quarter, thanks largely to lower-than-expected production costs. But the company lowered its 2011 copper and gold sales guidance by 1 per cent and 7 per cent, respectively, said Canaccord Genuity analyst Gary Lampard.

Downside: Mr. Lampard maintained his "buy" recommendation but cut his price target by $10 (U.S.) to $125. More bullish is Desjardins Securities Inc. analyst John Redstone, who maintained his $158.50 target.

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