Guess what's rising into company of bluest chips
By Matt Krantz
USA Today
Shares of Google jumped above $400 a share to a record high yesterday, silencing skeptics thinking the soaring stock would hit a ceiling.
Shares of the popular search engine gained $5.30 to $403.45, more than quadrupling since it went public 15 months ago.
The stock's rise pushed the company's value to $119.2 billion, making it the nation's 26th-most-valuable publicly traded company, surpassing Cisco Systems, Amgen and Coca-Cola, according to a USA Today analysis of data from Reuters Fundamentals. Google's price has doubled this year — the only $100 billion company to do so this year.
Even owners of the stock can only marvel at its ascent since it went public for $85 a share last year. "Who would have ever thought it would be $400 a year later?" said Ken Smith, director of technology investing for Munder. "It's amazing."
Share prices, by themselves, have meaning only when multiplied by the number of outstanding shares to get a total market value. But the sheer size of Google's share price is notable because it is:
That's causing investors and analysts to wonder if the price targets are too low or if Google's shares have hit their fair price. "I'm struggling with that," said Brian Prenoveau, analyst at Muriel Siebert who put a $400 price target on Google after it reported 595 percent higher third-quarter earnings on Oct. 20 and the stock price was $303.20. "The story hasn't changed," he said.
But Google's valuation is more reasonable now than it was when it went public, Smith said. The company has a 48 price-earnings ratio based on expected 2006 earnings, cheaper than its 60 P-E when it went public.
That's why investors shouldn't get hung up on the seemingly pricey $400 a share, said First Albany's Jason Avilio, who has a $450 price target. "There's still room for numbers to go up," he said.
