• by Wendy Davis , Staff Writer @wendyndavis, May 31, 2005

In a research note published this morning, financial analyst Piper Jaffray Co. forecasts that Google stock will continue its meteoric rise, based on the company's fast-tracked diversification. "We predict that by the end of 2006, Google will be seen as a full-fledged multi-application company," writes Piper Jaffray Senior Research Analysts Safa Rashtchy and Aaron Kessler.

The report praises Google for creating a myriad of products that are "superior" to those of competitors. Some of Google's new offerings include maps, local search, desktop search, news, e-mail, and most recently, a personalized home page. "Google may well repeat what it did to search in other areas," states the report.

The analysts buoyantly increased the 12-month price target for Google to $300 from $275 -- based on the same formula Piper Jaffray uses with Yahoo! "Google should not have a revenue-concentration discount compared with Yahoo!" the report states.

Of course, the online industry has seen optimistic stock reports before. Many investors have been burned by the vicissitudes of the market. And, while Piper Jaffray indicates it's mindful of history -- the report notes that its estimate is based on a lower multiple than eBay received at the height of its growth -- the report is almost unrelentingly optimistic.

Still, the report does concede that Google continues to face risks, such as competition from other companies. In fact, many industry watchers are wondering exactly how MSN's recent entry into search will affect Google. Will Microsoft steal market share from Google? Or, will Google launch its own browser before that happens?

Until that answer is known, which could be years out, Google's long-term fortunes appear to hang in the balance.