Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) is the best company in the digital advertising arena says analyst Daniel Ernst at Hudson Square Research in a report dated October 13, 2014. The analyst noted, however, that he is doubtful about the company’s increasing non-core investment, and also FX and European economic growth looks challenging.

Google Inc Q3 Earnings Preview

Mixed 3Q for Google expected

The report noted that Android monetization has started to show positive results, and Google shares are the least expensive of the internet group. Taking into consideration all these facts, HSR analysts are seeing upside in the shares and upgrading the internet giant from Hold to Buy.

For the next quarter, the search engine giant is expected to post mixed results “with continued momentum in paid click growth offset by CPC and FX pressure.” Ernst expects PF-EPS to gain 12% year over year to $6.37 compared to the consensus of $6.54.

Google estimates trimmed by RBC Capital

Separately, RBC Capital Market analysts have lowered their estimates on Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) in their Large Cap Quarterly Preview. In a report dated October 13, 2014, RBC Capital Market analysts (Mark S. Mahaney, Rohit Kulkarni, Andrew Bruckner and Brian Peak) revised their third-quarter estimates, and now expect Google to report gross revenue of $16.40 billion, net revenue of $13.02 billion, Non GAAP Operating income of $5.35 billion and Non GAAP EPS of $6.33. Gross revenue/ Non GAAP EPS estimates are below the Street estimates of $16.58 billion and EPS of $6.56.

Current estimates for the third-quarter of $13.0 billion net revenue is based on 3% quarter over quarter growth in the United States Gross revenue and 2.6% quarter over quarter growth in International Gross revenue.

The RBC analysts also suggested some items that should be focused upon. In the second-quarter, paid clicks surged 25% year over year, but analysts believe clicks could be approximately 20% year over year. However, cost per click is expected to decline at a slower rate compared to the second-quarter.

Second-quarter non-GAAP operating margin of 40.6% was stagnant quarter over quarter, but dropped 110 basis points year over year. There have been headwinds in terms of margin in the recent quarters owing to the sale of hardware devices, investment in new projects and the growth of ‘Licensing & Other’ revenue. Organic revenue at the company has surged more than 20% over the past 18 quarters, which is encouraging considering a $60B+ run rate, the analysts note.