With shares of Google (NASDAQ:GOOG)(NASDAQ:GOOGL) trading around $586, is GOOG an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
T = Trends for a Stock’s Movement
Google is a global technology company focused on improving the ways people engage with information. The business is based on the following areas: search, advertising, operating systems and platforms, and enterprise. The company generates revenue primarily by delivering online advertising. Google is a search giant with most of the market share largely because of its execution and delivery. An increasing number of consumers and companies worldwide are coming online, which will surely increase the amount of eyes on the company’s ads and, in turn, advertising revenue. At this rate, look for Google to remain on top of the Internet world.
Diabetics may be able to track their blood sugar using contact lenses in the next few years thanks to Google’s newest deal. Google’s smart contact lens project is getting a boost from a new deal with Novartis (NYSE:NVS). Google’s research division, Google[x], will provide the technology behind the smart contact lens to Novartis’s Alcon eye-care division, which will license the technology. The partnership will also have the two companies working together to refine the technology so that they can eventually progress to the testing phase. Once it survives that phase and gets the needed approvals from the U.S. Food and Drug Administration, then it will eventually make it to the market.
In some ways, the deal is the ideal match of technology and medical knowledge. Google specializes in devices and the small sensors that make the smart contact lenses possible. Novartis brings its medical and treatment knowledge to the table. The Wall Street Journal reported that analysts like the deal from a business perspective since Alcon is a leader in the contact lens market. Google described how its smart contact lenses would work in a January blog post. Currently, how the lenses will work is through the use of sensors between two layers of contact material. The sensor will detect blood glucose levels, an important indicator of health for diabetics. The lenses may be modified as a result of this partnership to improve them or to use them to monitor other conditions. Novartis division Alcon also wants to apply the technology to treating the condition presbyopia, an eye condition that causes people to lose the ability to focus. It is currently treated with glasses.
The company sees the potential to use Google’s smart contact lens technology for a wide variety of diseases and conditions. “Alcon and Google have a deep and common passion for innovation,” said Jeff George, division head of Alcon, in a press release announcing the partnership. “By combining Alcon’s leadership in eye care and expertise in contact lenses and intraocular lenses with Google’s innovative ‘smart lens’ technology and groundbreaking speed in research, we aim to unlock a new frontier to jointly address the unmet medical needs of millions of eye care patients around the world.”