Google Inc is the best
placed of any company to benefit from the shift to mobile, increased local advertising and
wearable’s, analysts said after the search giant posted its 18th straight
quarter of 20 per cent-plus revenue growth.
At least seven brokerages raised their target price
on the stock on Friday by as much as $75, to a high of $700.Google shares were
set to open about
4 per cent higher at just over $600.The company, which is also set to benefit from the
so-called "internet of things", said on Thursday that second-quarter
revenue rose 22 per cent to $15.96 billion, beating the average analyst
estimate of $15.61 billion.
Growth was driven by the company's core search business, YouTube and product-listing ads, which combined to drive three times as much mobile traffic for merchants compared with last year, Jefferies analysts wrote in a note.
Growth was driven by the company's core search business, YouTube and product-listing ads, which combined to drive three times as much mobile traffic for merchants compared with last year, Jefferies analysts wrote in a note.
Brokerage Jefferies maintained its "buy"
rating and $700 price target on the stock.Of the 46 analysts covering Google, 36 have a
"buy" or a higher rating on the stock and 10 have a "hold".
There are no "sell" ratings, according to Star Mine data.Google earns most of its revenue from advt.The number of "paid clicks" by consumers
on ads serviced by Google increased 25 per cent year-on-year in the quarter.However, the average price of the ads declined 6
per cent as ad rates on mobile phones are typically cheaper than traditional
online ads because of their smaller screens.
"Google is
successfully transitioning its business from PC to mobile, and is arguably in a
more favourable position in mobile than it was in PC, which should eventually
be reflected in a higher multiple," Deutsche Bank analyst Ross Sandler wrote
in a client note.Google also owns Android, the
world's most-used mobile software, and YouTube, the most popular
video-streaming service.
Other online companies
such as Facebook Inc. and Twitter Inc. are
also revamping their advertising businesses to take advantage of the shift to mobile
devices.
But Google has
established unusually deep competitive "moats" around its business
through scale, aggressive product innovation
and substantial investment, RBC Capital Markets analysts
wrote in a research note.
Google's capital investment budget has topped $17
billion over the past five years, and the company has spent about $13 billion
on research, according to analysts.
The company is also spending big to push into new
markets with innovations such as wearable computers, ultra-high-speed internet
access and home automation - the "internet of things."Google shares were trading at $604.33 before the
bell, after closing at $580.82 on Thursday.
Up to Thursday's close, the stock had risen 26 per
cent in the past year. The stock hit an adjusted life high of $615.03 in
February.
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