Google reports earnings after the closing bell tomorrow and analysts weigh in on that they expect.
Sorry for the jargon, folks, but the analysts following Google aren’t really the literary type. Reading through, there’s not too much surprising here– analysts are all expecting a blowout quarter for Google, due in large part to the holiday season. Let’s check in on how much they see Google pulling in and what that’ll do to the share price:
Citi’s Mark S. Mahaney who is a Google (GOOG) buy at a target price of $725 says:
Justin Post at BofA Merrill Lynch who has a $710 price objective”
Oppenheimer raises their price target $65 to $705 and says:
Barclay’s Douglas Anmuth who maintains his Price Target of $675:
ThinkEquity’s Aaron Kessler raises target GOOG to $780 and says:
J.P. Morgan’s Imran Khan whose $625.00 price target is below Google’s current trading says:
Merriman Capital’s Richard Fetyko, who just bumped Google target range up $50 to $675-$725 says:
Steifel’s Jordan Rohan also raises his Price Target $50 to $700 and says:
Youssef H. Squali at Jeffries raises his target GOOG $10 to $710 and says:
- Raising 4Q estimates. We expect net revenue and NEPS of $6.2B and $8.41 vs. $6.01B and $8.00, previously. Current consensus stands at $6.05B and $8.07. We’ve also raised our FY11 estimates to $26.47B and $34.26, from $25.98B and $34.06, previously. Mgt provides no forward guidance.
- Checks show robust CPCs/query/traffic growth. Channel checks with SEO/SEMs and others intra quarter suggest that holiday ad spend was resilient to economic uncertainty, as demand was stimulated by aggressive online promotions early in the season, culminating in Cyber Monday hitting a record $1B+ in sales. Overall retail sales in the US were up 12% Y/Y, at the high end of our 10-12% estimate. Increased promotional activity led to higher CPCs for Google with CPCs up between mid-single digits and high-teens Y/Y across important categories like Retail, Travel, Finance and Autos (we’re modeling for +6%). In terms of volume, Google’s US explicit query growth, a proxy for US paid click growth, grew by 14.3% Y/Y in 4Q, faster than the overall market (SCOR).
- FX, a tailwind. With int’l revenue accounting for ~52% of sales, we believe that the 4% Q/Q decline in USD vs. the company’s basket of currencies should result in an unhedged rev. gain of ~246M in 4Q, ~$0.32 impact on NEPS. That said, GOOG’s hedging program may offset some or all of the F/X impact.
- New estimates reflect 4Q bonus payment/salary hike. We modeled for a $31M ($0.08 EPS) charge in 4Q to account for a $1K after-tax holiday bonus, announced in November. We’re also modeling for 10% raise for eligible employees starting Jan 1st.
- GOOG, still a top pick. On top of a core search franchise that remains strong, Google’s mobile and display opportunities remain vast. With 26% of all US smartphone users claiming an Android device as their primary phone (vs. Apple’s 25%-comScore), Android’s adoption has been a success. With ~300K activations daily in 4Q, Android is offering large and local advertisers a growing platform to deliver locally-focused mobile ads on top of a robust search offering. In Display, we estimate that Google is second only to Yahoo! with ~8% market share, and we expect it to become an even stronger player in 2011.
We’ll be covering Google’s earnings announcement as it happens. Check in tomorrow after the bell.
- Analyst roundup on Google earnings, lavish praise edition (tech.fortune.cnn.com)