Analyst: Ads Still Key To Google Inc. Results

Google Inc.

chalked up its fifth consecutive quarterly earnings miss last week but an analyst said Monday its fast growth continues to make the company an attractive investment. Argus's Joseph Bonner maintained a Buy rating and $675 target, but trimmed his 2015 earnings forecast more than 3 percent to $28.70 a share. Google traded recently down about 2 percent to $526.71. Bonner cited aggressive spending and foreign exchange headwinds for his action. Analysts generally are bullish on the stock, with 35 out of 44 maintaining a Buy rating or its equivalent, according to FactSet. Nine are at Hold. Google's margins have been under pressure recently as it ramps up hiring and made acquisitions to support growth in its core business, Bonner said. "We need to remember that advertising makes up about 90 percent of Google's revenue," Bonner said, noting that fourth-quarter advertising grew 15 percent. Bonner ranked as setbacks the November decision by Mozilla to remove Google as the default search bar in its browser, as well as Google's more recent announcement to end consumer sales of its Google Glass and focus the device on work applications. Although investors may look askance at some of Google's less-likely sounding development projects, Chief Executive Larry Paige said recently the company will continue spending on what he called "moon shots." Bonner noted that 80 percent of the company's investment spending is on core products like search, mobile and chrome.