Analysts remain positive on Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) heading into next week’s earnings report. Deutsche Bank analysts say the search giant is their “best in class for mega-cap tech.” They think the company offers one of consumer Internet’s “most compelling stories” with “the best of all worlds.” They say Google has growth, innovation and a “reasonable” price to earnings ratio of 18 times 2015 numbers.
Upside seen to Google’s results
In a research note dated April 10, 2014, analyst Ross Sandler and his team said they expect a modest beat when Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) releases its earnings report next week. They increased their net revenue to flat quarter over quarter, compared to consensus estimates of a 2% decline. They think international revenues will be the source of upside by about $200 million.
The Deutsche Bank team says the best time to buy Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) into a quarter is when the search giant’s revenue will likely beat expectations and sentiment on the company is mixed. For the first quarter of the year, they have at least one of those criteria. Their checks suggest Google’s core search trends are solid and that the “surging revenue trajectory” in Google’s International Play revenue will likely drive outperformance. They do expect the usual seasonal downtick in EBITDA margins to 46%, but they expect earnings per share to benefit as Motorola Mobility moves into discontinued operations.
Tone on Google looks bullish
The analysts say in the early part of the year, Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG)’s key initiatives were mobile product development, removing friction, closing the gap between mobile and desktop advertising prices, pushing into brand advertising and pushing display and YouTube dominance even further.
The Deutsche Bank team has increased its revenue estimate for Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) but pushed their EBITDA margin project down slightly for the first quarter. They cited a mix shift to lower margin revenue and an uptick in seasonal expenses.
They continue to rate Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) as a Buy with a $665 per share price target.
