In 2007, GOOG will be negatively impacted by a continued decline in the growth rate of Google's earnings per share. Analysts forecast a 36% growth in EPS for Google in 2007 ($12.63), versus its 78% rate in 2006 and a 172% rate in 2005. As Google's earnings growth slows, its share price to earnings ratio will also fall; GOOG's 2006 PE of 50 is likely to dip to 36 in 2007. A GOOG 2007 fair value of $454 (36 PE X $12.63 EPS) is below its 2006 closing price.
GOOG is down several points again today, trading in the $442 range. [poll id=68]