Yesterday Wall Street, investors and journalists all got excited because Piper Jaffray (PJC) analyst Safa Rashtchy changed his outlook for eBay Inc (Nasdaq: EBAY) to underperform. If he is correct, investors buying the stock in the last few years are sitting on dead money and will be for the next year or so.

I have no idea how eBay will perform with all the noise surrounding it these days, but I do know how Piper Jaffray analysts are doing -- so far they are under performing. Although eBay closed down yesterday, it remains above Safa's valuation, so investors are not jumping on his bandwagon yet.

My prediction is that PJ's analysts are more likely to under perform than eBay!

In January PJ predicted Google Inc. (Nasdaq: GOOG) would be $600 per share by the end of the year. Yesterday GOOG closed at $373.73. See: Google after the bell for 8-24-06: Google's pending excess problem as reported by Brian White. Well it's not December 31, 2006 yet, but so far PJ is way under performing because the shares are down, not up, and time is a wasting. Do you envision GOOG advancing more than 50% by the end of the year?

What's really astounding to me is the degree of accountability relative to the pay. Analysts are very well paid no matter how bad their track record. That implies to me that they are being paid for something other than analysis. To be fair, while down now, GOOG has been trading in a broad range over the course of the year.

Through its two earnings reports investors have been exercising some caution even as I have been blasting valuation every time I hear an overzealous prediction. In my post What IS Google worth? I tried to not only to show the difficulty of valuing such a precarious stock and relatively new company, but also indicate where a deep value investor might be willing to buy into the company. As time passes, Google will grow into its current valuation.

PJ has let the $600 target ride all year so I guess it still stands by it. PJ's call on eBay leaves a lot of room for error. Who knows, maybe this "dart" will land near its target? With each passing day the probability of PJ being correct about GOOG diminishes. I think it is more likely that PJ changes its GOOG prediction before the end of the year because I sure don't see investors throwing $600 per share into the pot.

And with eBay, your guess is as good as theirs.

Disclosure: I have never held any position in Google long or short. I owned shares in eBay until January 2006 and have no current position.

Sheldon Liber is the CEO of a small private investment company and the vice president for Design and Research of an Architecture & Planning firm.

GOOG at $600 (good luck!) + eBay at, what? originally appeared on BloggingStocks on Fri, 25 Aug 2006 17:00:00 EST. Please see our terms for use of feeds.