Google Shares Slide After Morgan Stanley Downgrade
Analyst says 'consensus too optimistic'
Google may be ramping up innovation with new hires and competitive products, but investment bank Morgan Stanley says it’s not clear if the revenue will follow.
In a note to investors Thursday, Morgan Stanley also downgraded the company’s stock from overweight to equal-weight and cut its price target from $645 to $600. By midday Friday, Google’s stock price dipped more than 3 percent to about $529.
“Given Google’s aggressive hiring plans, rising compensation expense, and significant advertising spend on Chrome & other Google products, we expect EBITDA margin to decline in C2011/C2012,” Morgan Stanley analyst Scott Devitt said in the note.
Devitt also said “the consensus is too optimistic” on the revenue contributions of the company’s “newer” businesses, including DoubleClick, YouTube, AdMob, the Android Market and mobile search.
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