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S&P backtracks on Google downgrade

Analyst says 20 percent drop in Web giant's share price over the past month has made the stock "fairly valued."

A week after downgrading Google's stock, Standard & Poor's reversed course, saying the stock price had fallen so much that it was now a more attractive buy.

Scott Kessler, head of technology sector equity research at S&P, wrote in a research note released today and cited by the Associated Press that he was upgrading the Web search giant's rating to "hold" from the "sell" rating he bestowed on the company's shares last week following Google's gutsy move to buy Motorola Mobility for $12.5 billion. The acquisition will give Google patents that could protect Android from intellectual-property lawsuits.

Kessler issued the controversial downgrade on August 16, citing concerns that Motorola's portfolio would not in fact insulate Google from IP issues. S&P equity researchers downgraded Google's stock from a "buy" to a "sell" and lowered the company's share price target from $700 to $500.

Kessler said in the research note released today that he still had concerns about the deal, but that Google's stock was now "fairly valued" after failing about 20 percent over the past month.

Google shares rose $7.25, or 1.5 percent, to $498.17 during regular trading today.