Google Inc (NASDAQ:GOOGL) did not had an excellent financial year with lower than expected growth in all four previous quarters. Just ahead of its fourth quarter earnings release, Credit Suisse Group AG (ADR) (NYSE:CS) has cut the price target for search engine company to $700 from previous $722. Despite of the lowly financial year, some analysts are still bullish on the stock.
In its target cut for the search engine giant, the analysis firm cited several reasons including increased capital expenditures, heightened research and development spending and increasing competition in its core search engine business. Stephen Ju, Credit Suisse Group AG (ADR) (NYSE:CS)’s analyst, estimated revenues of $12.1 billion for Google Inc (NASDAQ:GOOGL)’s website.
Mr. Ju further added,
“We assume modest growth over the next five years for Google’s advertising business, as strong growth from YouTube and DoubleClick offset our forecast for a linear deceleration path for Google’s more mature search business. However, a growing mix-shift away from network search and continued growth of Google’s ‘Other’ revenue line should result in … low-to-mid teens growth of net revenue.”
Credit Suisse Group AG (ADR) (NYSE:CS) is not the only analyst cutting price targets for Google Inc (NASDAQ:GOOGL) as Stifel, investment bank, downgraded the search engine company amid increasing competition. Some of the primary competitors in front of Google in the search space include Facebook Inc (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN), Baidu (NASDAQ:BIDU), and Yandex (NASDAQ:YNDX) from Russia.
At the same time, the Android operating system from Google is facing stiff competition from the increasing sales of Apple Inc (NASDAQ:AAPL)’s iPhone 6 and iPhone 6 Plus.
However some analysts are still on the search engine’s side and Brian Wieser, Pivotal Research, said,
“many of the negative considerations we have been focused on – including compressing margins, investment of capital away from the company’s core competencies and government relations among others – have become more widely held among the investment community and make Google attractive at current price levels.”
Wieser revised his price target to $610 from an earlier $620 target.
This article has been written by Prakash Pandey.