Shares of Google (GOOG) are up $2.08, or 0.3%, at $767.82, up from the opening slump of $758.50 but down off the highs of the session of $772.96, even as the company’s continued to get hit with some negative reports this week that have pushed the stock down 1% from Friday’s close of $775.60.
This morning, Hilliard Lyons’s Stephen Turner cut his rating on the stock to Neutral from “Long-Term Buy,” and stripped his $840 price target, writing that with the stock near its 52-week high of $776.60, the stock “may pause ahead of better growth prospects in the back half of the year.”
The mobile business is a “long-term positive” for Google, but the company faces challenges to monetize last year’s acquisition of Motorola Mobility, which requires investment that will weigh on profits.
The stock, too, he thinks, has priced in the payoff from Google having escaped the worst of last year’s regulatory concerns:
In our view, the good news related to the anti- trust investigations by the Federal Trade Commission and the European Commission are fully baked in to the stock, as the FTC is requiring only small changes to Google�s business practices.
Turner’s note today follows a downgrade yesterday from Oracle Investment Research’s Laurence Balter, who downgraded the stock to Sell from Hold, and cut his target from $760 to $670, writing the shares are about to suffer an unwinding of a pair trade that pitted Google against Apple (AAPL):
Well that was fast. Too fast, in fact. After placing our $760 target on November 29, 2012, we didn�t expect it to take two months to get a 10% return, but now we see why. However, we believe there has been a prevailing trade of hedge funds going long Google and short Apple on a pair trade. That spread which is at 2 standard deviations, is now ready to close.
Balter provides the following chart to show the progress of the pair trade, as he sees it (click for larger image):
These negative reports run counter to RBC Capital‘s Mark Mahaney, who�defended the stock�on CNBC on Monday, following�a downgrade that day�by BMO Capital‘s Daniel Salmon.
Apple shares today are up 83 cents at $458.67.
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