Google Earnings Preview: Shares May Stay Range-Bound


Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) is scheduled to release its next earnings report on Thursday after closing bell. Goldman Sachs analysts aren’t expecting the report to be much of a catalyst to Google shares and believe the stock will remain range-bound in the near future.

What to expect in Google’s earnings report

In their report dated Oct. 12, 2014, analysts Heather Bellini, Shateel Alam and Nicole Hayashi said they’re expecting Google to post consolidated revenue of $13.2 billion, a 22% year over year increase. They’re looking for non-GAAP earnings per share of $6.64. Their revenue estimate is in line with the consensus estimate, while their earnings per share estimate is slightly higher than consensus at $6.56 per share.

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They’re projecting a non-GAAP operating margin of 34%, compared to the consensus estimate of 32.9%, and net ad revenue of $11.45 billion, which would be a 20% year over year increase and is in line with Wall Street’s average estimate.

Ad trends on Google

The Goldman Sachs team said their checks indicated that search spend on Google was about what they expected or maybe slightly ahead. They say any upside is due to pricing, particularly on smartphones.

They reported mixed commentary on Product Listing Ad pricing, as some saw flat pricing while others saw acceleration. The analysts said retail-focused partners expect to spend a lot on Product Listing Ads in the holiday season and saw good traction with the bigger ad format.

The analysts also said that for the most part, the pricing trends they found were positive. They learned that overall search impressions fell, although more improvements in click-through rates offset that decline. They said the better click-through rates are mostly a result of Google’s better targeting and also better ad campaigns being launched by marketers.

Google sentiment still high

The Goldman Sachs analysts believe that sentiment on Google is still high, although they say no one expects this week’s earnings report to be a major catalyst. They think the search giant’s shares will remain fairly range-bound. They continue to rate Google as Neutral with a $625 per share price target.

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