UPDATE: Benchmark Downgrades Google to Hold

The Benchmark Company has published a research report on Google

and has downgraded the company from Buy to Hold after channel checks showed severe slowdowns in Europe despite strong online advertising stateside. In the report, Benchmark writes, "Channel checks reveal that European online advertising has dropped from over 20% y/y growth in 1H11 to up only 5% in 4Q11. Europe represents around 35%-40% of Google's revenue. Google currently has 90% or more search market share in Europe. This dominant position limits the potential for share gains to offset macro headwinds. The 1H12 outlook for Europe is sustained softness.
A strong domestic 4Q11 is well-documented with comScore finding ecommerce up 15% y/y and Channel Advisor seeing more than 20% growth. Our advertising checks support this, with y/y growth around 15%-20%. Domestic operations account for 48% of Google's revenue and likely drive solid 4Q results. 4Q consensus is $8.4 billion in net revenue, up 32% y/y, $4.6 billion in EBITDA and $10.46 in EPS. Our 4Q estimates are unchanged and in-line with consensus. FX fluctuation positively impacted Google's 2011 revenue growth through 3Q. In 4Q FX is likely neutral." The Benchmark Company maintains its $700 price target on Google, which closed yesterday at $668.28.