Google (GOOG) Q1 'In-Line', Focus on 'Google Preferred' Strategy - BMO Capital

BMO Capital analyst Dan Salmon reiterated a Market Perform rating and $525 price target on Google (NASDAQ: GOOG) following an in-line Q1.

Salmon comments, "We remain focused on Google's – and more specifically YouTube's – opportunity to draw in major advertisers' branding budgets as the company continues to move “up-funnel” and augment its core competency in performance/direct response marketing. Most investor questions of late have centered on YouTube’s adoption of outside measurement from Nielsen and comScore and its impact on new ad spending on YouTube. Management again reiterated the importance of these moves; however, we’re increasingly focused on the new “Google Preferred” strategy that aims to parse the “most engaging content on YouTube” and how it may change advertisers’ willingness to put dollars to work on the platform. YouTube aims to package its top 5% content more conveniently for ad buyers and also ramp up its own ad spending to bring mainstream awareness to that content, including buying TV and billboard advertisements (read: more investment and potential margin pressure). We’re also mindful of YouTube’s litigation settlement with Viacom (about which there were no comments on the earnings call) and the possibility that a détente is coming and more “TV content” finds its way onto YouTube. We look ahead to Upfronts to gauge how all of this is absorbed by the agency community."

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 $556.54 yesterday.

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