Jefferies Latest to Boost Google (GOOG) Price Target to $1000

March 5, 2013 7:17 AM EST Send to a Friend
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Making it the third firm in the last two weeks to take the plunge, Jefferies boosted its price target on new market leader Google (NASDAQ: GOOG) from $875 to $1,000. Jefferies joins Bernstein and CLSA in the $1000-club.

Jefferies' US Internet Team cited: 1) traction in commerce initiatives like Product Listing Ads (PLAs), which are seeing high usage as Google Shopping transitions its Int'l program to a paid service, 2) growth at YouTube driven by TrueView ads, 3) our belief mobile CPC will improve on a growing market and Enhanced Campaigns, and 4) optimism about hardware.

The firm's proprietary checks show persistently high Product Listing Ads (PLAs) levels through 1Q. PLAs are essentially ads with images, and reflect a change from the more traditional text-based 'blue link' results, the firm explains. "For the top 17 verticals, 35% of searches now return results with a PLA. Looking at the top-five verticals, 58% of queries now return a PLA," they said. "These are roughly the same levels as we tracked during the prime holiday online shopping season."

Google Shopping's global transition to a fee-based program kicked off on Feb. 13 for results in the UK, Germany, France, Japan, Italy, Spain, Netherlands, Brazil, Australia, Switzerland, and the Czech Republic, they also said.

On YouTube, Jefferies' team said TrueView video ads are driving growth. They currently model YouTube revenue growing +76% year-over-year to $4.5 billion this year. As a reference point, this is more than the $4.3 billion they model for Netfllix (NASDAQ: NFLX).

Lastly, they said Enhanced Campaigns should improve mobile CPC given advertisers now have to pay the same rate to target desktop and tablet users.

Jefferies raised FY13 EPS from $46.39 to $48.25 and FY14 from $54.35 to $56.63.

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 $821.50 yesterday.


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