Barclays on U.S. Internet: May Industry Query Growth Reaccelerates
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Rating Summary:
9 Buy, 11 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 6 | New: 26
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Barclays on U.S. Internet: May Industry Query Growth Reaccelerates
Barclays analyst, Anthony J. DiClemente, said, "comScore's (Nasdaq: SCOR) May search data out last night indicates that Google (Nasdaq: GOOG) gained 10 bps of share M/M, while Yahoo! (Nasdaq: YHOO) and Bing's (Nasdaq: MSFT) query share were relatively flat over the same period. Industry queries reaccelerated in May to +11% Y/Y from +7.4% Y/Y in April. Google's domestic query share is now 65.5% and growth reaccelerated to 10% Y/Y, Yahoo!'s share is 15.9% as query growth reaccelerated to 6.5% Y/Y, while Bing's share is 14.1% as query growth reaccelerated 45% Y/Y. Two-thirds through the quarter search pricing appears to remain strong. Efficient Frontier recently reported Finance CPCs were up 35% Y/Y QTD through May and Channel Advisor suggested overall CPCs increased 15% in May. Despite market concerns around increased investment spending and strategy, we reiterate our Overweight rating on Google on what we believe is a relatively strong search ad market, continued growth in paid clicks and CPCs, strong exposure to mobile via Android, and traction in Display."
Google: "For 2Q, we project 17.5% Y/Y paid click growth, 7.3% Y/Y CPC growth, and flat sequential net revenue growth. We project 2Q EBITDA margins of 54.5%, down 500 bps Y/Y, given continued investments and hiring."
Yahoo!: "While query acceleration is certainly a positive, we believe maintaining share is critical for Yahoo! going forward-particularly as the company works with Microsoft to improve RPS through better targeting and monetization techniques. Yahoo!'s internal query volumes grew 6% in 1Q, exceeding internal expectations, and the company continues to invest in new search experiences such as Quick Apps and its accordion style module for content results."
Barclays analyst, Anthony J. DiClemente, said, "comScore's (Nasdaq: SCOR) May search data out last night indicates that Google (Nasdaq: GOOG) gained 10 bps of share M/M, while Yahoo! (Nasdaq: YHOO) and Bing's (Nasdaq: MSFT) query share were relatively flat over the same period. Industry queries reaccelerated in May to +11% Y/Y from +7.4% Y/Y in April. Google's domestic query share is now 65.5% and growth reaccelerated to 10% Y/Y, Yahoo!'s share is 15.9% as query growth reaccelerated to 6.5% Y/Y, while Bing's share is 14.1% as query growth reaccelerated 45% Y/Y. Two-thirds through the quarter search pricing appears to remain strong. Efficient Frontier recently reported Finance CPCs were up 35% Y/Y QTD through May and Channel Advisor suggested overall CPCs increased 15% in May. Despite market concerns around increased investment spending and strategy, we reiterate our Overweight rating on Google on what we believe is a relatively strong search ad market, continued growth in paid clicks and CPCs, strong exposure to mobile via Android, and traction in Display."
Google: "For 2Q, we project 17.5% Y/Y paid click growth, 7.3% Y/Y CPC growth, and flat sequential net revenue growth. We project 2Q EBITDA margins of 54.5%, down 500 bps Y/Y, given continued investments and hiring."
Yahoo!: "While query acceleration is certainly a positive, we believe maintaining share is critical for Yahoo! going forward-particularly as the company works with Microsoft to improve RPS through better targeting and monetization techniques. Yahoo!'s internal query volumes grew 6% in 1Q, exceeding internal expectations, and the company continues to invest in new search experiences such as Quick Apps and its accordion style module for content results."
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