Google's strength in advertising to drive growth - analysts

Fri Jan 31, 2014 9:17pm IST

A security personnel stands guard during the media tour in the Google data centre in Changhua Coastal Industrial Park, central Taiwan, December 11, 2013. REUTERS/Pichi Chuang/Files

A security personnel stands guard during the media tour in the Google data centre in Changhua Coastal Industrial Park, central Taiwan, December 11, 2013.

Credit: Reuters/Pichi Chuang/Files

Related Topics

Stocks

   

REUTERS - Google Inc (GOOG.O) looks set to extend its leadership in online advertising as it sharpens its focus on its core business, analysts said after strong ad sales helped the No. 1 search company report stronger-than-expected quarterly revenue.

Google's shares, which closed at $1,135 ahead of the results announcement on Thursday, opened about 3 percent higher after at least 12 brokerages raised their price targets on the stock to as much as $1,400.

Broker Canaccord Genuity raised its target price by $370 to $1,370, noting that Google's website revenue growth accelerated to 22.1 percent in the fourth quarter, the third consecutive quarter of faster growth.

Canaccord and others also said the sale of Google's loss-making Motorola handset unit to China's Lenovo Group Ltd (0992.HK) would help it focus on its core internet business and boost margins.

Citi Investment Research, which raised its target price to $1,350 from $1,190 and maintained a 'buy' rating, said Google's report demonstrated the company's continued business momentum.

Goldman Sachs noted that the quarter was the second out of the last nine that net ad revenue had beaten the average estimate. Goldman raised its price target to $1,200 from $1,125.

Google, whose shares were trading at $750 this time last year, said it benefited from strong demand from brand marketers and retailers in the quarter.

"In coming quarters, we expect improvement in cost-per-click (CPC) trends as Product Listing Ads and AdWords Enhanced Campaigns lift CPCs," UBS Securities analyst Eric Sheridan, who raised his target by $50 to $1,350, wrote in a note to clients.

CPC refers to the price advertisers pay Google each time a user clicks on their ad.

In the past year, Google has changed the way advertisers run campaigns on its website, offering the same ads simultaneously on PCs and mobile devices.

RBC Capital Markets analyst Mark Mahaney, who raised his price target to $1,400 from $1,300, said Google had positioned itself well to take advantage of most of the major trends in consumer internet through organic investments and acquisitions.

Google's recent acquisitions include artificial intelligence company DeepMind Technologies and smart thermostat and smoke alarm-maker Nest Labs.

Google also bought a stake in Taiwan displaymaker Himax Technologies (HIMX.O), bringing it closer to producing a commercial version of its Google Glass eyewear.

Google shares were up 1.8 percent at $1,158 in early trading on the Nasdaq.

(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Ted Kerr)

FILED UNDER:

Sony Cyber Attack

REUTERS SHOWCASE

Ten Years On

Ten Years On

10 years on, tsunami warning stumbles at the "last mile".  Full Article 

Exit Polls

Exit Polls

BJP unlikely to form Jammu & Kashmir govt - polls.  Full Article 

Forceful Conversions

Forceful Conversions

BJP distances itself from religious conversions.  Full Article 

Hopeful Dhoni

Hopeful Dhoni

India's new vintage nearly ready, says Dhoni.  Full Article 

Photo

Fund Raising

Flipkart raises $700 million in fresh funding.   Full Article 

Reforms Push

Reforms Push

Modi may order insurance, coal reforms if vote delayed - officials.  Full Article 

Ali Hospitalized

Ali Hospitalized

Boxing great Muhammad Ali hospitalized with pneumonia.  Full Article 

Going International

Going International

Bollywood’s Priyanka Chopra sets sights on American TV.  Full Article 

India This Week

India This Week

Some of our best photos from this week.   Full Coverage 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device   Full Coverage