S&P backtracks on Google downgrade
San Francisco: A week after downgrading Google Inc 's stock, Standard and Poor's has reversed course and has upgraded it, saying the Internet search leader's shares have fallen so much they've now become a good deal.
Analyst Scott Kessler wrote in a research note Monday that he was upgrading the stock because it had slipped below the USD 500 price target he had set last Tuesday, after Google announced its unexpected USD 12.5 billion acquisition of cellphone maker Motorola Mobility, a deal driven less by Motorola's hardware than its treasure trove of more than 17,000 patents.
Kessler said Google's 20 percent drop in stock price over the past month has made the shares "fairly valued," and he has upgraded them to "hold" from "sell." Kessler had downgraded the stock from "buy" to "sell" a week ago.
He wrote at the time that he worried the Motorola deal may not protect Google's Android smartphone software from all intellectual property lawsuits, and that absorbing the hardware maker would hurt Google's growth prospects and profitability.
He cut his 12-month price target at the time to USD 500, from USD 700 per share.
On Monday, Kessler noted that he still had concerns about the deal. The stock rose USD 7.25, or 1.5 percent, to USD 498.17 during the regular trading session, and fell 42 cents to USD 497.75 in extended trading.