Google Talked YouTube On Its Conference Call: What's Next?

In a report published Friday, analysts at Credit Suisse maintained their Outperform rating on Google Inc GOOG, while raising the price target from $683 to $690. The company has reported in-line 1Q15 results, with strength in the Network and Google Site revenues being offset by weakness in the Licensing and Other segments due to FX headwinds. "Investor attention should be focused squarely on YouTube as we believe it contributed more meaningfully to drive paid click growth of +25% (stable for three quarters) as well as Google Website revenue exceeding our expectations despite material FX-driven headwinds," the analysts said. Related Link: Google Q1 Earnings Conference Call: A Play-By-Play Recap However, results for Google Play were below the estimates due to the business being over-indexed to regions that experienced higher currency impact. Among the company's emerging businesses, Google Play and YouTube are rapidly growing and the analysts expect the two businesses to drive revenue growth. Both these businesses are also expected to deliver incremental revenues and margins. "We increase our FY15 net revenue forecast by 40bps on higher Google O&O (particularly search) revenue and a 10bps decrease in associated O&O TAC, offset by a 10% decrease in our Licensing revenue estimate (Google Play)," Credit Suisse added. The EPS estimate for FY15 has been decreased by 270 bps, from $27.12 to $26.40.