Shares of Google Inc. fell nearly 5 percent on Monday and have lost a quarter of their value this month as the Web search company that once could do no wrong faces up to the realities of a business that must face the bad with the good.

But despite several bouts of negative news that have knocked a stock once thought headed to $500 back below $350, the vast majority of Wall Street analysts remain sanguine over Google's prospects and advise investors to buy the stock.

The latest drop follows a report in Barron's, the financial weekly, that speculated the Web search company's stock could drop 50 percent under a scenario in which it would fall well short of bullish analysts' 2006 revenue estimates.

Several analysts rose to the stock's defense on Monday, saying that as Google's valuation has decelerated to a level around 30 times Wall Street's consensus profit forecast for 2007, a common complaint about the shares' price is gone.

RBC Capital Markets analyst Jordan Rohan said Google shares might fall to a base level of as low as $330 but at this point is far more likely to rise than to fall.

"People are seeing Google's glass as three-quarters' empty instead of what it really is, which is three-quarters full," Rohan said. He rates the shares as "outperform" with a moderate price target of $435.

Henry Blodget, the former Merrill Lynch Internet analyst who has enjoyed a rebirth as a critic of the latest crop of Internet stocks, heaped scorn on bullish Wall analysts such as Citigroup's Mark Mahaney who reiterated a $500 price target.

"These are the times that actual investors live for: Panics and pile-ons in which, fundamentally, not much has changed, but, psychologically, everything has changed," Blodget wrote on his Internet Outsider.

For while investor debate rages over whether the company faces mounting competitive pressures or is merely suffering a temporary lull in confidence in the Internet sector, some analysts say that Google stock has hit a sustainable level that is far more in line with the Internet sector as a whole.

"If paid search isn't broken -- and Google is the leader -- and Web advertising isn't broken -- and it's growing faster than traditional ads -- then you have a hard time arguing Google merits less than a 30 times P/E multiple," Rohan said.

Hoefer & Arnett analyst Martin Pyykkonen said the stock has undergone a housecleaning of its investor base as short-term, momentum investors have cleared out of the stock, leaving a more stable class of investors who may hold it longer-term.

The stock will likely drift until the next near-term catalyst, which is the Analyst Day meeting set to be held at Google's Silicon Valley headquarters on March 2, he said.

Rohan said his biggest concern remains what impact the sudden deceleration in the value of Google's shares may have on employee morale at the company over the long run.

Google's stock is down 27 percent from last month's highs after closing off $16.91, or 4.7 percent on the day, at $345.70 on Monday on Nasdaq. Nonetheless, the stock has only fallen back to levels it first hit four months ago.