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Google Inc (GOOGL): Buying Opportunity Before July 1

Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) has been lagging so far this year as questions about its operating expenditures remain. However, even if the search giant spends a record amount of capital this year, Susquehanna analysts say they see beats ahead, both on the top and bottom lines.

Not a comeback for Google

In a report dated June 24, 2014, analysts Brian Nowak and Michael Costantini noted that Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) typically underperforms the first half of the year and outperforms the second half of the year. They said that over the last seven years, investors who owned Google stock during the first half of the year saw about 19% of relative under-performance. However, those who owned it only in the second half of the year saw 122% of out-performance.

The Susquehanna analyst said they think Wall Street’s consensus estimates are just too low. They report that their conversations with others in the industry suggest that the company’s ad budget growth is still strong. Meanwhile, they say Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG)’s edge in mobile data covering search, Chrome and display still make it one of just a very few platforms that offer targeting and re-targeting for mobile devices that’s actually effective.

They say that more spending on mobile advertising plus strong core growth in YouTube and Google.com will result in a continuation of the shift to Google Websites with lower traffic acquisition costs. Because of this, they have increased their estimates for advertising revenues, raising them 1% higher than Wall Street’s revenue projections.

Google steps up operating expenditures

The analysts said they are raising their estimates in spite of expectations that Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) will spend a lot more on operating expenditures this year. In fact, their estimates increase even if Google spends a record amount of money on expenditures this year.

They say most people who follow Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) realize that it’s extremely difficult to clearly estimate expenditures and investments. This is why they are taking such an aggressive view. They would rather over-estimate the amount Google is spending so that there’s room for potential upside.

The analysts maintained their Positive rating and $700 per share price target for Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG).