GOOG Stock On The Rise!
The stock broke through its resistance yesterday, and is trading strong today, up approximately 1.5% at $580. By now various reports are out that search continued to gain steam in Q110 so chances are Google will meet or beat estimates this Thursday. The stock trades at 28x 2010 EPS and 18x Enterprise Value / EBIT. Potential near-term catalysts include March quarter earnings this Thursday, Android adoption; and benchmarks surrounding newer initiatives, which have mostly been disappointing. As search matures, Google has yet to develop a strong second growth engine.
Wall Street Out In Full Force Ahead Of Earnings Thursday
Expectations are relatively low, which leaves room for an upside surprise. Some thoughts from the Street:
- Imran Khan at J.P. Morgan believes Google will report an in-line quarter (2.4% sequential revenue growth to $5.07 billion) with International stronger than the U.S. market. He believes margins will be particularly strong and has increased his EBITDA margin estimate to 62.8%. According to Khan, any acceleration in paid click growth will be a key catalyst for the stock.
- Citigroup’s Mark Mahaney believes that Google “estimates are reasonable, with greater variance likely to the upside than to the downside” (read: chances are they beat estimates). Mahaney is telling investors to focus on vertical and geographic trends, paid click and cost-per-click growth, FX and hedging activities, outlook on China, and updates on display, mobile and video advertising.
- Based on various surveys and channel checks, Ross Sandler at RBC believes that SEM agencies continue to spend more this year than last year. His 0.5% sequential revenue growth forecast for Google’s first quarter could be conservative as Google has historically outperformed the SEM market.
- Doug Anmuth at Barclays Capital is confident in his 1.3% sequential growth revenue forecast for the first quarter and believes the company could beat his estimates. Recent pressure on the shares have created a buying opportunity, in his opinion.
Search-Ad Market Set To Grow 20% This Year (paidContent)
The search market is roaring back! Efficient Frontier, which manages search spending for companies online, expects search spending to jump 20% this year. This is up from a previous estimate of between 15 – 20% per cent growth. That’s good news for Google (70%+ of the search market), which analysts estimate will grow revenue between 13-15% this year.
Android Market Share On The Rise, According To Multiple Sources (The Motley Fool)
With new reports coming out seemingly every week one just can’t ignore the fact that Android is gaining share of the Smartphone OS market at an impressive clip. Last week, comScore reported that Android’s share of U.S. smartphone users rocketed to 9% in February from January. Globally, Android’s February share of AdMob impressions grew to 24% while iPhone’s share dropped. Finally, AndroLib.com counted 9,117 new apps as being added to Android Market in March. What’s missing is now is a media cloud a la iTunes.
Google Rarely Misses Wall Street Expectations (Business Insider)
In anticipation of Google earnings on Thursday, Business Insider took a look at how the company has fared against Wall Street expectations for the last four years. Pretty well! Google has only missed EPS estimates three times in the last four years, with the last miss coming a year and a half ago. To beat the street later this week, Google’s EPS will have to be higher than $6.58.
Google, The Information Company, To Take Over Cloud Computing (Tech Crunch)
At Atmosphere, a conference on cloud computing technologies, Google CEO Eric Schmidt said that he knows search is a maturing industry so the company is looking to cloud computing as another growth driver. He told the audience that Google is not just about search, but is “really an information company.” This is probably why Dave Girouard, President of Google Enterprise, hinted that Google was looking to give developers more value-added services in the cloud, such as services that allow developers to use untapped Google technology. If true, Google is set to take on Amazon’s AWS.
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