In a brief report published Sunday, Oracle Investment Research’s Laurence Isaac Balter warns that Google (GOOG)’s stock, which set an all-time high of $844 a share on March 6, is due for a fall.
“As we begin to hear the rumblings of $1000 target prices and cheerleaders in pom-poms, we are raising the target price only slightly from $670 to $700 to reflect earnings per share growth, but we still think you are overpaying,” Balter writes.
Based on his statistical findings, the analyst notes the following :
- “From a P/E perspective GOOG is the 10th most expensive in the S&P 100 at 24.6x
- At 3.8x P/Book, it’s the 31st most expensive
- With a PEG ratio of 1.20, it’s trading at a premium of its growth rate, whereas Apple’s PEG ratio is just 0.55x (the 5th lowest in the entire S&P 500)
- Over the past 5 years, GOOG has been compounding retained earnings at only 6.74%, whereas Apple has been nearly double that at 11.88%
- GOOG’s return on Assets has been declining at -6.47%/yr compounded rate, whereas Apple has been increasing by 11.7%/yr”
Balter is best known for calling Apple’s top back in August, five weeks before the ticker started to nosedive. Apple (AAPL) hit a peak price of $705 in the fall of 2012, but printed a new 52-week low of $419 last week, taking its market cap to below $400 billion for the first time in more than a year.
GOOG is up $1.19, or 0.14%, to $832.71 /Pre: market Mar 11, 9:14AM EDT.
AAPL is down $2.48 , or 0.57%, to $429.24 /Pre: market Mar 11, 9:14AM EDT.