Here's The Bullish Case For Google This Quarter

Google's casualty in China

Google is on track to beat first quarter estimates, Citi analyst Mark Mahaney writes in a note today.

Mark sees $5.07 billion in net revenue beating Street estimates of $4.92 billion, and $6.71 non-GAAP EPS versus estimates of $6.55. Mark has a $640 price target on the stock.

His key reasons for being bullish on Google:

  • Search engine marketers (SEM) are increasing their spending. After doing some channel checks, Mark finds SEMs are increasing spending and the are responding positively to new Google search products.
  • Search revenue estimates are positive: From Mark, “We estimate 12% Y/Y Paid Click and 13.5% Y/Y CPC growth, along with a 1% Q/Q decline in U.S. Segment Revenue and a 6% Q/Q increase in International Segment Revenue. We do expect FX to provide material Q/Q headwinds (approximately $175MM).”
  • Using eCommerce as a proxy, Google is looking good: Using the marketing spend of Amazon, Priceline, Expedia and eBay as proxies, Google looks good. Those eCommerce companies will grow ad spending by 35% on a year over year basis.
  • comScore says Google’s search share is stable: Google has held onto approximately 65% of search share for a while now.

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