MINYANVILLE ORIGINAL Google
(NASDAQ:GOOG) will report earnings after the bell. We currently have the company rated as a Strong Buy based on our proprietary algorithm, and we went long the name on July 30 for a 20% gain. We reduced 100% of our position when the countertrend indicator reached an Overbought level at $767. The name is no longer Overbought and reached a Neutral reading at $740.
We're excited about Google because of its long-term growth prospects. Unlike some competitors, Google's search on mobile works well and is growing. What's the potential downside? One issue could be that market expectations are simply too high: Recall in July when Apple
(NASDAQ:AAPL) reported a strong jump in earnings but, because it missed analysts' even higher targets, the stock fell. As of now, we don't see that happening with Google. Another downside factor to consider is how the EU's position over privacy issues plays out.
Earlier this week, EU regulators objected to the changes Google made this year regarding the terms and conditions governing how it can use data about his hundreds of millions of customers across all its platforms -- Gmail, YouTube, search, etc. The European Commission, the EU's executive arm, in January proposed the creation of a single set of privacy rules throughout the 27-country bloc. If implemented, the reform would give regulators the power to fine companies up to 2% of their annual revenues. For Google, that would amount to a $760 million fine. Given the collective shrug consumers have given the issue on this side of the pond, our feeling is that Google is already so integrated into people's lives that this won't happen.
This morning Needham upgraded its price target on Google from $750 to $825.
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