Google's Click Slowdown Is Less Than It Looks

Google Inc GOOGL's slowdown in paid clicks growth may be less than meets the eye, according to an analyst who took a second look at recent data.

But the analyst, Axiom's Victor Anthony, reiterated a Hold rating on Google Wednesday, citing a host of headwinds including regulatory concerns and the possible loss of Apple Inc. AAPL as a search partner.

A supposed slowdown in Google's paid clicks growth to 1 percent in the first quarter according to digital marketing agency Merkle RKG could be at least partly a fluke caused by the agency's retail focus, said Anthony.

"On the surface, the read was very negative," Anthony said. "But part of the slowdown may be specific to RKG's data."

Google's paid clicks grew 12 percent in the fourth quarter of 2014.

Related Link: Wedbush Warns Of Decelerating Trends At Google

Mozilla Corp. recently removed Google as the default search engine in its Firefox browser, but Anthony called that "a very small factor" in the click rate, given that Google has recently taken market share from Yahoo! Inc. YHOO.

Anthony said Google's spending on so-called moonshot projects like self-driving cars and robotic surgery is pressuring its profit margins while regulatory concerns continue to weigh on the company in Europe.

The analyst also cited increasing competition and worries that Apple may follow Mozilla in booting Google from its browser.

Forty-nine analysts following Google maintain a mean rating of Buy on the company with a $626 target.

Google shares are off nearly 3 percent in the past year and traded recently at $550.58, down $4.12.