Standard & Poor’s upgrades Google stock
Company now slaps ‘Hold’ rating on internet giant, still has Motorola deal concerns
Standard & Poor's has upgraded Google's stock from the ‘Sell' rating it gave the company last week on the news of its Motorola Mobility purchase, to a ‘Hold' rating, according to Reuters.
S&P slapped Google with the Sell rating and was the only company, out of the 40 tracked by Reuters, to give it such a bearish call after the $12.5bn planned purchase deal was announced.
S&P last week voiced concerns that the company was planning to enter the smartphone manufacturing market, which it said could weigh heavily on Google's financials and create conflicts with other Android OS handset vendors.
Shares in Google have tumbled over 10% from their closing price before the deal was announced, trading at $498, compared to the Dow Jones Industrial Average's approximate 3% drop during the period.
The head of technology sector equity research at Standard & Poor's said the Motorola deal had brought Google's share price down to the $500 target he had set when he downgraded the stock.
"It's very hard for us to say sell this stock when it's trading below its target price," Kessler told Reuters.
Kessler agreed that it was unusual to see a stock's recommendation change so quickly, but said the move was consistent with S&P's approach to equity research.
Google currently has 14 ‘strong buy' ratings, 20 ‘buy' ratings and five ‘hold' ratings, according to Thomson Reuters data.
Kessler said that despite the stock rating upgrade, the S&P still has many questions and concerns about the proposed acquisition.