Google Upgraded At Oppenheimer, Firm Sees $700 Sum-Of-Parts

• Google Inc GOOGL shares are down 2 percent in the last one month, and have been hovering around the $600 mark since September 28.
• Oppenheimer’s Jason Helfstein upgraded the rating on the company from Perform to Outperform, while raising the price target from $670 to $700.
• While citing that ad blocking concerns appear overblown, Helfstein said that search is likely to continue to command most of the global Internet ad spend through 2018.

Analyst Jason Helfstein mentioned that YouTube usage is growing at the fastest pace in over two years. In 2Q, time spent on YouTube increased by 60 percent y/y.

Google has launched two new ad products, namely Customer Match and Universal App Campaigns, that compete directly with Facebook's FB app-install ads and Custom Audiences. Helfstein believes that the concerns surrounding ad-blocking are “less an issue” for Google, since the company controls Chrome and Android and has ability to pay for white-listing.

Moreover, budgets are shifting from display to search, which is more profitable, Helfstein said, while adding that search “is likely to remain the majority of global Internet ad spend through 2018.”

The analyst expects total search to represent 45 percent of Internet ad spend in the US and 47 percent internationally. Moreover, Mobile search is growing at a 2013-2018 CAGR of 34 percent in the US and 36 percent internationally.

In the report Oppenheimer noted, "Sum-of-the-parts valuation suggests $700 target, with implied $905 bull case."