Analyst Actions: Google, Caterpillar, Infospace

Opinions from analysts around Wall Street on Friday

GOLDMAN RAISES ESTIMATES, TARGET FOR GOOGLE

Goldman Sachs analyst Anthony Noto says Google's (GOOG) third quarter revenue and operating income outperformed by 2.5%, 3.4%, respectively. He sees a positive catalyst for shares that should drive estimates meaningfully higher and increase investor confidence in its long-term growth rate of around 20%.

Noto advises investors to buy Google with 25% upside to his new yearend 2008 target of $800, vs. his old $620 yearend 2007 target.

He raises $15.79 2007 EPS estimate to $16.05, $20.73 for 2008 to $22.20, $25.54 for 2009 to $28.00. He believes continued revenue, profit outperformance will drive Street estimates and valuations higher. He rates the stock as buy.

WACHOVIA KEEPS OUTPERFORM ON CATERPILLAR

Caterpillar's (CAT) third-quarter EPS misses analysts' estimate, and the company trims 2007 view. Wachovia analyst Andrew Casey says the company's $1.40 third quarter EPS missed his and consensus estimates by $0.01 and $0.03. And Caterpillar cut the midpoint of its 2007 guidance range to $5.40, which is consistent with his estimate but slightly beneath consensus' $5.44.

Casey believes most of the negative guidance was expected, but the stock reaction could be negative. He says, given that Caterpillar has reiterated its 2010 goals, implying $8-$10 in EPS, this could be an attractive buying opportunity for long-term investors. He notes that Caterpillar expects the rest of the world to remain strong and offset ongoing weakness in North America.

He recommends buying on any weakness. He maintains $5.40 2007 EPS and $6.50 2008 estimates. He has a $93-$96 12-18 month valuation range for the stock.

NEEDHAM UPGRADES INFOSPACE TO BUY FROM HOLD

Analyst Mark May says he expects the sale of Infospace's (INSP) Directory unit for $225 million and its Mobile unit for $135 million to close by yearend. After that, he expects Infospace to pay out a special dividend of about $400 million in the first quarter of 2008, leaving it with $175-$200 million in cash and $28 million in calendar 2008 EBITDA from its Online Search business. He is applying a reasonable 6X EV/EBITDA multiple and taking into consideration post-deals cash, derives a current fair value of $22 and a yearend target price of $23.

While May sees challenges to growth in the Online Search business, he does view it as a cash cow business and views the current valuation as compelling.

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