Google Inc GOOGL GOOG posted strong results for the second quarter of 2015, despite FX headwinds. Argus analyst Joseph Bonner reiterated a Buy rating, while raising his price target from $675.00 to $850.00.
According to the note, the firm believes the stock is “attractively valued given the company’s rapidly expanding businesses.” Amid a transition from desktop to mobile, the company continues to make acquisitions and ramp up hiring in order to go on with expansion.
Related Link: Google Soars On Q2 Results; Analyst Reactions Are Mixed
However, the analysts explain that these investments have generated margin compression in recent quarters, although Google has managed to maintain its leading market share in core search and overhaul its display, YouTube and mobile businesses.
Moreover, to tackle the margins problem and drive expansion, the company’s new CFO, Ruth Porat, has promised expense discipline going forward. Porat also talked about “narrowing the price gap between new, lower-priced mobile ads and desktop advertising (…) an area of heightened concern as mobile usage has exploded.”
Analysts at Argus note that the new CFO seems to keep an open mind regarding shareholder returns -- dividends or share buybacks. Nonetheless, they warn that “some recent news reports may have exaggerated her enthusiasm.”
The firm maintains its 2015 EPS forecast at $28.38 and its 2016 estimate at $32.16.
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