Google Inc (NASDAQ:GOOG) PT Reduced After Future Ad Revenue Concerns Get Played Up


Dallas, Texas 04/22/2014 (FINANCIALSTRENDS) –  Google Inc (NASDAQ:GOOG) saw its price target reduced by a host of analysts and rating agencies post its 1Q14 earnings call, in which it disclosed that its advertisement revenue stream is under pressure in the changed business dynamics. The analyst reiterations included Buy and Outperform ratings on 17th April by RBC Capital, Deutsche Bank and CRT Capital respectively and the price target was reduced to new price points which ranged between $670 and $625 from previous range of $710 to $665.

The show of collective lack of confidence in the stock of Google Inc (NASDAQ:GOOG) comes on the back of search engine major seeing a pronounced dip in prices it commands for its advertisements and this development has been accentuated by more faster cash burn caused by bringing on more employees and investing in research and development geared towards developing new business ideas and products which are not available with completion.  The shift in the ad spending patterns of enterprises is caused by a phenomenal jump in users accessing their web content via mobile digital devices like tablets and smart phones instead of traditional laptops and desktops.

Irrespective of the concerns of analysts for future revenue stream of Google Inc (NASDAQ:GOOG), the search engine major continues to be one of the most profitable firms in the IT space at this juncture. For the quarter, it generated $3.45 billion, which translates into earnings per share of $5.04. These results compares favourably against the $3.3 billion earnings it had reported in 1Q13. EPS in 1Q13 had come in at $4.97. Analyst estimates had pegged earnings per share to come in at $6.36 and was one of the major reasons for the downcast PT on the stock.  Revenue for the quarter went up by a impressive 19 percent in comparison to 1Q13 numbers.