In a report published Thursday, BMO Capital analyst Daniel Salmon upgraded the rating on Google Inc (NASDAQ: GOOG) from Market Perform to Outperform, while raising the price target from $570 to $670. The analyst expressed confidence in the company's performance in future quarters, driven by "stiffening margins."
"We believe margin stabilization in 2H15 and 2016 will be less about a new CFO simply coming on board and more about Google already focusing its investment on key growth areas," Salmon stated.
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This, together with a stable outlook for revenues, is expected to drive the stock valuation as well, going forward. The analyst expects steady revenue for Google, based on consistent search growth, along with YouTube continuing to work to gain TV ad dollars.
The analyst believes that these two factors could lead to the "1) unleashing the search data set for ad targeting on other O&O properties like YouTube, or perhaps even off-site via DoubleClick or AdSense; and 2) capital return, though it is certainly not expected."
The estimates for the company have been raised above the consensus forecasts.
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