It’s as inevitable as death and taxes – Wall Street’s Google barrage. Not unexpectedly, the brokerage community will soon bombard investors with a slew of glowing stock-pushing research reports on the operator of the Internet’s most popular search engine following its nifty public debut Thursday, accompanied by substantial press coverage.

In its first day of trading, Google’s 19.6 million publicly traded shares, which were priced at $85, jumped 18% to close at just more than $100. They tacked on nearly another 8% on Friday, closing at $108.31.

Jumping on the bandwagon early, some firms, such as Jefferies & Co. and Think Equity Partners, are already touting the stock with price targets of $115 and $120, respectively.

Another firm, Spelman Financial, a New York-based investment research boutique, also has a target – a shocking $74, nearly a 31.5% decline from current levels.

“We’re not ga-ga over Google,” said president Guy Cohen. “This is an overpriced stock that should be sold, not bought.”

Spelman, which is putting the finishing touches on an extensive research report that will shortly be sent to clients, bases its $74 target on an analysis of such measurements as discounted cash flow, price to sales, EBITDA (earnings before interest, taxes, depreciation, and amortization), and the price-to earnings multiple (currently a ritzy 33).

Mr. Cohen said his firm is especially concerned with the deterioration in gross margins, which fell from 70% in gross margins in 2002 to 67% last year and then slumped again to 52% in the first half of this year. “Margin deterioration is something that really bothers Wall Street,” he said.

(Google’s management has already said it expects operating margins to decline this year as a result of an anticipated increase in costs and expenses as a percentage of revenues. Further, it anticipates the growth rate of costs and expenses, other than stock-based compensation, will exceed this year’s revenue growth rate.)

Mr. Cohen cites other risk factors such as decelerating revenue growth, which will accompany continuous margin decline; competitive threats; limited revenue diversity (98% of sales come from online advertising), and a large insider overhang.

As for competition, he points in particular to Microsoft as the most formidable challenger and a major threat. Talk within Microsoft, notes Mr. Cohen, is that Bill Gates’s next goal is to definitely build a new research engine to compete against Google. At present, Microsoft has 20% of the search engine market through its MSN engine, versus a 41% market share for Google.

Mr. Cohen says the supposed word within Microsoft – which it denies – is that the company will spend $1 billion to develop a newer engine that he expects will be ready in the second quarter of next year.

Turning to potential insider sales, which would be an obvious drag on the stock, our Google skeptic points out the IPO has created a couple of thousand new millionaires within the company. Should stock prices in general weaken, he said, this could spur sales of Google shares, and you definitely won’t have the demand to counteract the amount of new supply coming into the market. The key, he said, is the stock’s overvaluation will not be sustainable in a bad market.

Yet another risk is thought to be Google’s rich p/e multiple. Characterizing Google as primarily an online advertising agency, Mr. Notes that its p/e of 33 is about 50% higher than the industry average of 21.8.

But isn’t Google worth a premium, given its leadership position and its technology? “At our $74 target, we’re already giving it a premium,” he said. His bottom line: “I’d get out while the getting is good.”

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