Sanford Bernstein analyst Carlos Kirjner believes that search will continue to grow double-digit percentages, and display and YouTube "will be material contributors to revenue growth and profitability, leading revenues and profits to beat expectations." Kirjner rates Google shares "overweight" with a $727 price target.
J.P. Morgan analyst Doug Anmuth believes that the quality of ads are changing for the better, but that could weigh on cost-per-click, a key metric, in the short run.
"Designed to be net revenue positive, search and ad changes are continually rolled out and the net impact to individual metrics can vary quarter to quarter," Anmuth wrote, in his research note. "Google commented on its Inside Search blog that approximately 107 search quality changes were made in the quarter (17 in January, 40 in February, 50 in March)." He rates Google shares "overweight" with a $686 price target.
Raymond James analyst Aaron Kessler believes that Google will report inline earnings later this week, but has some concern about Search Engine Marketing checks. SEM refers to gaining traffic from search engines, as epitomized by Google AdWords, or similar offerings from Yahoo! (YHOO) and Microsoft (MSFT)."On average, Search Engine Marketing (SEM) checks indicate modest deceleration in search spend for the first quarter. Our discussions and industry data points from SEMs indicate low-double digit to low-20% year-over-year growth in the first quarter of 2012 (a deceleration from 20%-plus growth in the fourth quarter)," Kessler wrote in his research report. "While the SEMs have generally indicated a slowdown in first-quarter year-over-year growth rates, we would note that many of the SEMs recorded a similar slowdown last year during the first quarter." He rates Google stock "outperform" with a $740 price target. Wells Fargo analyst Jason Maynard believes that revenue stemming from both the United States and Canada will continue to maintain its pace, but Europe and the UK may see weakness. "We are now forecasting a Q1 headwind from FX of less than 1% which translates into an approximately $60-$70 million negative impact on net revenue," Maynard wrote in his research note. He rates Google shares "market perform" with a $620 to $640 price range.
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