In their company comment of April 16, 2014, Raymond James analysts Aaron Kessler and Ben Cohen reiterate their Outperform rating on Google Inc (NASDAQ:GOOG) and a price target of $660 based on 21 times 2015E non-GAAP EPS.

“We maintain our positive outlook on Google shares given: 1) our expectations for solid search spend growth in 1Q; 2) mobile strength, particularly in international markets; 3) solid engagement trends; and 4) we believe valuation is attractive,” say the analysts, ahead of the company’s earnings report for the first quarter due out later today.

Raymond James expectations higher than consensus

Against market expectations of non-GAAP EPS of $ 6.35 and net revenue of $ 12.23 billion, the Raymond James analysts expect the company to declare somewhat better EPS of $6.62 and revenue of $12.34 billion respectively.

Key metrics

The analysts estimate that Google Inc (NASDAQ:GOOG) could see a growth of 28% year-on-year in clicks in its core search business and a decline of 9.6% year-on-year in CPCs (cost per click).

“We remain comfortable with our 1Q14 estimate for Google gross advertising revenue growth of 17% year-on-year (versus +17% year-on-year in 4Q),” say the analysts.

Positive engagement trends as per comScore

According to data from comScore, during the first quarter and compared to the fourth quarter, unique user growth (PC+mobile) rose at US Google from -5% to 7%% and at US YouTube from -5% to -2% as per the chart below.

Google user-growth

In terms of total minutes, US Google grew 30% in the first quarter compared to 18% in the fourth quarter, while YouTube grew only 19% this quarter compared to 31% in the previous one.

2-goog-minutes-growth

According to Raymond James, these are positive engagement trends.

Google’s valuation

For the full year 2015, Raymond James expect Google Inc (NASDAQ:GOOG) to report non-GAAP EPS of $ 31.36 and arrive at a price target of $ 660 by applying a PE multiple of 21 times.

“The multiple is at the high end of Google Inc (NASDAQ:GOOG)’s historical two-year forward P/E range (12-22x), which we believe is warranted given Google’s solid growth outlook and mobile strength,” say the analysts.