In the technology sector, even the best companies can stumble. Shares of Apple (Nasdaq: AAPL) recently took a hit from subpar quarterly results, largely due to a hiccup in iPhone sales ahead of the launch of a an upgraded phone. Mighty Amazon.com (Nasdaq: AMZN) saw a commensurate beatdown after spending more money than Wall Street would’ve liked. Yet the third musketeer of this group, Google (Nasdaq: GOOG), saw no need for excuses. Third quarter sales of $97 billion came in a hefty $300 million ahead of forecasts. And the search giant earned $9.72 a share — roughly $1 a share more than analysts had been expecting — for the second straight quarter. Shares have risen nearly 20% since the beginning of the month.

But with the stock trading near $600, it could have more room to move. Many analysts have price targets between $650 and $700, and analysts at UBS have a street-high $800 price target. Let’s take a look at why they’re so bullish.

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For UBS’ Brian Pitz and Brian Fitzgerald, Google remains a robust growth story. They note that third-quarter sales growth of 33% (on a year-over-year basis) marks the fourth straight quarter of accelerating growth. Better still, growth isn’t being fueled just by core search-based revenue, but instead from Google’s heavy bets on mobile advertising and display ads.

In fact, Google’s Mobile division is growing at a 150% clip and now represents $2.5 billion in revenue on an annualized basis. Google’s Android now powers 45% of all smartphones, with 190 million phones in circulation worldwide. “We see Android growing gangbusters, and we don’t see anything that’s going to stop that,” CEO Larry Page said during a conference call with analysts. The numbers don’t lie: on average,  350,000 new Android phones were sold every day in the first quarter of 2011. In the third quarter, this figure hit 750,000.

So you can understand why Google went out and bought Motorola Mobility earlier this year. Having better control of the entire mobile ecosystem will enable Google to capitalize on every mobile strategy it chooses to pursue, regardless of whether other handset vendors provide support. (In fact, a feature-rich Motorola phone would likely compel rivals to offer all of the comparable features.)

Google’s Display division, which has doubled in size from a year ago, has become a key platform for advertisers. The unit, which now works with ever-bigger clients such as Disney (NYSE: DIS), snagged $600 million worth of new business in the past six months alone.

Perhaps one of the least discussed merits of Google’s growth relates to international expansion. In the most recent quarter, international search revenue grew at a 47% year-over-year pace, twice the rate seen in the United States. The company is making notable headway in Japan, Australia, Brazil and India.

Throwing spaghetti to the wall
The real charm of this business is that management shows no hesitation to keep launching new initiatives to extend its reach into new categories. Not all of them work out. Some, such as Google Buzz (a Twitter-like product) and Google Labs (an R&D-oriented division) have recently been shuttered. Meanwhile, other nascent projects may eventually grow to be a significant revenue driver. Google+, an effort aimed at the Facebook audience, already has more than 40 million registered users. This chart, which can be found on the tech blog of Familylink.com founder Paul Allen, shows how quickly the service has gained traction.

UBS’ analysts have run the numbers and figure the stock is just too cheap at 10 times projected 2012 profits (when Google’s $40 billion in net cash is excluded). To arrive at their $800 price target, which is roughly 33% above current levels, they use a discounted cash flow model. They calculate the net present value of future cash flow at $223 billion, add in the current $40 billion in cash, apply a 12% weighted cost of capital and assume a 3.5% long-term cash flow growth rate.

Risks to Consider: Google’s impressive momentum derives largely from the company’s ability to remain two steps ahead of the rest of the field. Yet in the technology industry, smaller, more nimble players sometimes make the boldest breakthroughs. (Hello Twitter? Hello Facebook?) Google will never derive the long-term cumulative cash flow UBS anticipates if new business models emerge that steal some thunder in terms of search, mobile advertising and other hot categories.

Analysts at Merrill Lynch, who have a $720 price target, still wonder if the Motorola deal will weigh on the stock : “We think there will be continued uncertainty on what Google will do with the hardware business and how the acquisition will impact Google’s valuation multiple.”

Action to Take –> Balanced against those risks is Google’s ability to simply replicate what works elsewhere on the web. Google+ is shaping up to be a formidable rival to Facebook, and you can count on management to closely monitor other emerging industry trends upon which to capitalize.

Other analysts who follow Google don’t hold the same level of ardor for the stock, with price targets generally ranging from $640 to $750, yet all appear to agree that Google’s recent quarterly momentum is likely to extend into the all-important holiday season. This looks like a nice short-term trade opportunity, though if shares move up to and past the $700 mark as the holiday season approaches, profit-taking may prove wise, despite UBS’ even loftier price target.