Google Inc (NASDAQ:GOOG)’s ability to take advantage of engagement-based services will help the company to penetrate further into the hardware and software segment. Also, the sale of Motorola’s handset division will help the internet giant to focus more on such emergent areas. With such pieces in play, a report from Evercore analysts (Ken Sena, Conor McDad and Andrew McNellis) released on March 24, 2014 has raised the price target on Google from $1,400 to $1,450.
Tools from Google to play bigger role in the future
Analysts believe that online travel is still in early stages, but the tools made available by Google Inc (NASDAQ:GOOG) to both merchant and consumer would “become a bigger player within the space,” according to analysts. Google has been making efforts to “shakeup the OTA-Hotelier rate parity contractual provisions and the resulting effects on Search marketing,” by coming up with tools like RLSAs (Remarketing Lists for Search Ads), which is helpful to hoteliers on the marketing front.
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2015 estimates raised
For the first quarter of 2014, and for full 2014, analysts have not changed the estimates. However, the estimates have been raised for 2015 owing to the rising opportunity for Google Inc (NASDAQ:GOOG) in the travel space through tools like hotel finder. For 2015, analysts have raised the revenue estimate by 2% to $77.9 billion, which is a 17% increase year over year compared to 15% previously. According to the analysts, the increase is primarily driven by a rise in search revenues. In line with the revenue estimates, adjusted EBITDA estimate is increased by 1.5% to $34.1 billion, which is a 54.5% margin as a percentage of net.
First quarter 2014 estimates have been kept unchanged as “we expect the implications of this report to primarily impact outer year estimates,” believe analysts. Ad revenues for the first quarter are expected to grow by 20% year over year to $10.7 billion on a CPC decline of -8% compared to -11% in the last quarter. Paid click is expected to grow by 28% versus 31% in the prior quarter. Total revenue for the quarter including licensing other revenue is estimated at $12.3 billion, which represents a 23% rise year over year.
Evercore analysts have an Overweight rating on Google Inc (NASDAQ:GOOG).