Fetyko asserts that GOOG will be among the first stocks to rally when the economy stabilizes, but that there is downside near-term to consensus estimates.
He thinks there will be a better entry point at some point in the next six months. Fetyko contends that the decline in consumer and business purchasing is having “a dampening effect on search engine marketing,” with keyword prices down 5%-30% from the third quarter. Fetyko also notes that traffic to e-commerce sits is down both year-over-year and sequentially, and that click-through rates are on ads are declining as well. He writes that those trends are not yet reflected in consensus estimates.
Fetyko thinks the stock will drop to the $200-$240 level, “which is where we would consider buying it.” Longer term, he says, Google will be “a major beneficiary of the secular shift of advertising budgets from offline to online and mobile channels.”
Despite the negative call, GOOG today is up $4.03, or 1.6%, to $263.59.
This would have been a lot more impressive call when the stock was at $300. Or $400. Or $500. Or $600. Or $700."