Don’t Count Google Inc (GOOG)+ out Despite Analyst Love for Facebook Inc (FB)

Analysts had mixed reactions and posted different ratings for Facebook following the announcement. Jefferies, for example, recommended a “hold” and cited the increased expenses as a cause for concern. The 82% increase in expenses resulted from funding several investment plans, as well as increased hiring. Jefferies analysts nevertheless were upbeat and explained that Facebook’s investment plan will yield benefits in the long run. But, pray tell, is there a “long run” game plan in store for social networking? Please give me your crystal ball if you have an idea on where Facebook will be a few years down the road.

No matter, Cantor Fitzgerald analysts maintained that Facebook is a “buy” and raised its price target to $35, up from $33. The company said this despite raising the company’s 2013 expenses from $3.7 billion to $4.2 billion.

Conclusion

Google and Facebook both carry impressive economic moats. However, Google is priced much more reasonably at 14.9x forward earnings and may still very well do everything that Facebook can do in the next few years. Does that entitle it to a $67.5 billion market cap surge? In my view, it does not. An interesting investment to make alongside Google would be AOL, Inc. (NYSE:AOL) . AOL has risen 33.5% year to date and more than doubled in the last 12 months. It has tremendous value as an online media distributor. And at 11x price to free cash flow and no debt, I also see the company as a potential takeover target. It is only worth $3.3 billion, so a competitor like Google or Facebook could easily jump in and complement their existing operations.

The article Don’t Count Google+ out Despite Analyst Love for Facebook originally appeared on Fool.com and is written by David Gould.

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