Google Has 'Messy' Earnings, But Good Valuation: Analyst

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In a report published Friday, analysts at Pacific Crest Securities maintained their Overweight rating on
Google, Inc.
GOOG
. The price target was maintained at $675. The analysts believe that the stock valuation remains favorable, compared to other mega-caps. The company has reported lower than expected 1Q results, once again. Both ex-TAC revenue and EBITDA were below the estimates due to Fx headwinds, which adversely affected sales by $795 million. Google's revenue growth was below the levels reported for Q4. However, the EBITDA margins, as well as the performance of Google Sites and Network were marginally higher than the estimates. The weak CPCs witnessed by YouTube are likely to be the reason for the lower than anticipated results. Google Sites also reported growth of 25 percent in paid clicks, as compared to the consensus expectation of 21.7 percent growth. CPC in this business declined 13 percent, year on year, although it was healthy and accelerating if one excludes TrueView ads. "We remain positive on GOOGL given the valuation relative to other mega-caps with the hope that the CFO change will yield at least one of the following: (1) guidance to minimize quarterly choppiness, (2) more product metrics, (3) more disclosure/dialogue with the Street at investor events and/or (4) share repurchases/dividends," the analysts added.
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Posted In: Analyst ColorReiterationAnalyst RatingsPacific Crest Securities
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