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Report: Expect Strong Q2 From Google

It may be a rocky time for Net stocks, but Google's still got room to grow, investment firm Lehman Brothers said in a report. Analyst Douglas Anmuth gave the Web firm an "overweight" rating and a price target of $530, which at its current price of 407.06 offers an attractive risk-reward. Why so strong? Lehman expects Google to beat second-quarter estimates again on strong search industry fundamentals--including continued market share gains and further improvements to its search monetization model, the analyst said. According to comScore, which monitors Web traffic, search volume this quarter is up a surprising 23 percent quarter-over-quarter. That bodes well for Google, the runaway leader in search traffic, as it continues to pull away from its competitors MSN and Yahoo, recording a 44.1 percent share of the market in May. All in all, the positives outweigh the negatives for Google, with its cost structure heavily focused on R&D, sales, distribution, and infrastructure development.

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