Benchmark Upgrades Google (GOOG) to Buy; Raises Estimates & PT

October 16, 2009 8:38 AM EDT

Benchmark upgrades Google (Nasdaq: GOOG) from Hold to Buy.

Benchmark analyst says, "Google reported a better-than-expected quarter, indicating a healthier online advertising market than we had anticipated. We now expect continued momentum because: “large advertisers have returned;” the seasonally strongest period of the year is starting; currency impacts are turning positive; and comparisons are getting easier. We increase estimates. Our price target rises from $500 to $625 per share."

:Google reported net revenue of $4.4 billion, up 8% y/y and higher than street consensus of about $4.3 billion. Strength came from Google’s owned websites, which have materially higher margins than the network. International was also a driver and represented 53% of total revenue...We were too cautious on this quarter. Google surprised us on the following items: Google site revenue was up 8% y/y with both the US and international better than we had forecast; cost-per-click improved sequentially and was only down 6% y/y; operating margin was more than 1 percentage point above our estimate at 46.6%; lower tax rate at 21%...We raise estimates. For 2010, we now expect 15% net revenue growth and
$26 per share in adjusted EPS."

To see more analyst ratings on GOOG Click Here.

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