Needham & Company Maintains a 'Buy' on Google (GOOG); 4Q11 Results miss the Mark; Lowering 2012 Estimates as Lower CPC Rates Could Linger
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Price: $343.54 -0.12%
Rating Summary:
44 Buy, 6 Hold, 0 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
44 Buy, 6 Hold, 0 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Needham & Company maintains a 'Buy' on Google (NASDAQ: GOOG) price target of $750.00.
Needham analyst said, "Google’s 4Q11 revenue misses expectations and we expect slower revenue growth and lower margins in 2012. While our revenue estimates turned out too optimistic, we also believe that lower than expected Cost-per-Click (CPC) rates and higher than expected Traffic Acquisition Costs (TAC) played key roles in the revenue and EPS shortfall. For 2012, we believe Search revenue should increase approximately 20% YoY. We expect CPC rates to continue to decline as a result of ad quality/format changes flowing through the model and as mobile becomes a larger percentage of the revenue mix."
"We estimate Android should be on an annualized run rate of $3.5 billion for 2012. While we expect the number of Android-based devices to be the primary growth engine, we also expect mobile advertising campaigns to increase...Google+ membership accelerates, which we expect to continue with the integration of Google+ into Search and other Google products. Google reported that Google+ now has over 90 million members, more than 2x the members announced just 90 days ago."
FY12 EPS estimate cut from $44.20 to $40.94.
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 $639.57 yesterday.
Needham analyst said, "Google’s 4Q11 revenue misses expectations and we expect slower revenue growth and lower margins in 2012. While our revenue estimates turned out too optimistic, we also believe that lower than expected Cost-per-Click (CPC) rates and higher than expected Traffic Acquisition Costs (TAC) played key roles in the revenue and EPS shortfall. For 2012, we believe Search revenue should increase approximately 20% YoY. We expect CPC rates to continue to decline as a result of ad quality/format changes flowing through the model and as mobile becomes a larger percentage of the revenue mix."
"We estimate Android should be on an annualized run rate of $3.5 billion for 2012. While we expect the number of Android-based devices to be the primary growth engine, we also expect mobile advertising campaigns to increase...Google+ membership accelerates, which we expect to continue with the integration of Google+ into Search and other Google products. Google reported that Google+ now has over 90 million members, more than 2x the members announced just 90 days ago."
FY12 EPS estimate cut from $44.20 to $40.94.
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 $639.57 yesterday.
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