Google (GOOG) Enhanced Campaigns Not as Good as Hoped - BMO Capital

BMO Capital reiterated a Market Perform rating and lowered its price target on Google (NASDAQ: GOOG) from $915 to $890 following Q2 non-GAAP EPS of $9.56 below the firm's estimate of $10.76 and the Street's $10.78 estimates.

Daniel Salmon notes that while enhanced campaigns are succeeding, just note as much as hoped.

"As expected, the roll out of Enhanced Campaigns – onto which 75% of AdWords campaigns have now been transitioned – has not been a panacea to cost-per-click declines," Salmon comments. "The upgraded buying platform is, however, helping clients drive better click-through-rate and ROI, in particular large chain businesses (retailers, quick-serve restaurants, etc.). This is the ultimate goal of Enhanced Campaigns, and we continue to be less concerned about CPC declines than the market in general. On the call, management also reiterated its focus on growing "absolute profit dollars" further supporting our belief that investors should assume continued margin erosion as new investments will never match the margins of the core search business. If valuation can moderate a little further, we'd look for new catalysts to get productive on the stock heading into the seasonally strong fourth quarter."

The firm lowered 2014 non-GAAP EPS to $52.00 from $53.50

For an analyst ratings summary and ratings history on Google click here. For more ratings news on Google click here.

Shares of Google closed at $910.68 yesterday.

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