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Google's Ecosystem

Two days after Piper Jaffray raised its one-year price target for Google's stock to $600 a share, another analyst has raised his 2006 price target to $550. In addition to bumping the price target up from $360, Robert Peck at Bear Stearns raised his rating on Google from "peer perform" to "outperform," citing "belief in the fundamentals and the burgeoning Google Ecosystem."

Peck's research note describes an ecosystem as a "community interacting as a functional unit, that grows and mutually supports the various components within it," much like Microsoft and IBM developed in the past.

The ecosystem has five attributes, Peck said: "Google's size is developing new sectors as a derivative; Google's direction and partners should have a resounding effect on existing companies; the Ecosystem should act as self-reinforcing to Google; Google's hardware competency is underrated, and a significant advantage; and the Ecosystem growth should create an economic lift for Google."

He also cites several risks Google's ecosystem faces, including increased and unforeseen competition, dependence on Internet access and content growth, legal risks and the enforceability of patents.

The company's stock closed at $445.24, giving it a market capitalization greater than $131 billion.