UPDATE 1-RESEARCH ALERT-Barclays cuts Google price target
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Oct 14 (Reuters) - Barclays Capital lowered its price target on Google Inc (GOOG.O) and said it expects the company's growth trajectory to be hurt in the near-term mainly due to its high market share, broader macro slowdown and a strong dollar.
The brokerage, however, maintained its "overweight" rating on the stock citing Google as one among the two best franchises in the Internet space - the other being Amazon.com Inc (AMZN.O) - and said Google shares were undervalued at current levels.
Analyst Douglas Anmuth, who cut his price target on the stock to $542 from $600, lowered his fourth-quarter and 2009 earnings estimates for the company.
Anmuth now expects the company's pro forma earnings per share for the fourth quarter to be $4.82, down from its prior view of $5.06. Revenue for the quarter was lowered by about 3 percent to $4.17 billion.
The analyst also lowered his 2009 revenue estimates by about 5 percent to $18.66 billion with earnings per share of $21.25.
Anmuth said the company needed to provide a better insight into how it was managing expenses, given the circumstances of a more highly penetrated business model and potential foreign exchange headwinds.
Google has also embarked on certain cost-cutting measures, including slow hiring, cuts in employee perks and scrapping of some projects that have less impact. But expenses on legal fees, professional service and bad debt have increased, he said.
"While we understand the strategic benefits for Google of an independent Yahoo, we are not sure the search deal is worth the more intense scrutiny that will accompany it," Anmuth said on the impending deal between the two companies.
Google shares were down 3 percent at $369.61 in morning trade Tuesday on Nasdaq. (Reporting by Antonita Madonna Devotta in Bangalore; Editing by Gopakumar Warrier)
