Google Inc (NASDAQ:GOOG), has been assigned a Buy rating by Jefferies analysts (Brian Pitz, Brian Fitzgerald, Timothy O’Shea, Sachin Khattar, and Stan Velikov) and the price target has been raised from $1000 to $1150. The analysts gave three reasons that make Google “a must-own stock.”
Major upside contributors for Google
Reasons given by analysts that make the stock compelling are that YouTube is best positioned when compared to other online video rivals and online streaming companies, Enhanced Campaigns call for marketers to easily show the multi-screen ad campaigns and, lastly, strong position in the mobile segment with one billion Android activations that will further increase the cost per click.
Solid 3Q performance on all fronts
Google Inc (NASDAQ:GOOG), reported an impressive quarter and major contributors in the revenue were core Search, YouTube, Google Shopping / PLAs, and mobile. For the third quarter, earnings per share came in at $10.74 compared to the streets estimate of $10.36. Operating expenditure was controlled.
Revenue for the search engine giant came in at $9.39 billion compared to Street estimates of $9.13 billion, which is the highest since the first quarter of 2012, and revenue surged 22 percent year on year. Google Inc (NASDAQ:GOOG), management said that TrueView skippable video ad format was gaining more traction and growing at 75 percent year on year.
Analysts feel that, in the first half of 2013, Google remains best positioned in the holiday quarter with its Google shopping and it product Listing Ad format.
Network revenue came in flat at $3.15 billion year on year compared to street expectations of $3.34 billion, but Google has knowingly left some short term revenue in exchange for enhancing overall ad ecosystem. Analysts noted that Google did this for the first time, and they support this strategy.
Android, paid click and CPC growth impressive
Google Inc (NASDAQ:GOOG), Android app store growth fueled licensing and other growth. According to Google’s management, around 1 billion Android devices were activated and 1.5 million are activated every day. Revenue of $1.2 billion is an increase of 85 percent year on year and was in line with the Street estimates.
According to the analysts, both paid click and CPC growth were up to the mark and reflected healthy ad ecosystem. Paid click growth that was up by 26 percent year on year, may be fueled by strong adoption of Enhanced Campaigns, which may be a positive development for marketers who can run more mobile ads.