Google (GOOG) Hits $1,000 For The First Time in History
Shares of Google (GOOG) made history last week, with shares surging above $1,000 for the first time ever after the company posted third quarter earnings that comfortably surpassed analyst estimates. The company reported adjusted earnings of $10.74 per share on revenue of $14.89 billion. Analysts had expected the company to earn $10.34 per share on revenue of $14.79 billion. Daily Chart
Googleâ s 12% year-over-year top line growth was fueled by paid clicks hitting the highest rate of growth in the past year.
This growth offset an 8% decline in average cost-per-click - the amount advertisers pay Google when Internet users click their ads. International growth was even more impressive, with the company posting a 32% year-over-year jump in revenue. GoogleÃƒÂ¢ s big beat prompted Wall Street analysts to suddenly bump up their price targets dramatically. More than 16 brokerages raised their price targets to a range between $880 and $1,220, with Deutsche Bank being the most optimistic, increasing its price target by 26%. J.P. Morgan analysts were also upbeat, stating, "We view solid paid clicks growth to be a good indicator of demand, driven by the continued shift to mobile." Back in February, Google introduced a new service which combined the advertising markets on smartphones, tablets, and desktops into a single platform to offset declines in cost-per-click rates. Desktop ads are traditionally more expensive than mobile ones - a dilemma that Yahoo (YHOO
) and Facebook (FB
) have also been struggling with. Analysts at RBC Capital Markets also highlighted GoogleÃƒÂ¢ s untapped growth potential in YouTube, the worldÃƒÂ¢ s most popular video streaming website, noting, "We estimate that Google's key YouTube asset generated approximately $4 billion in revenue in 2012, positioning Google extremely well for the strong growth in video advertising." YouTube video-ads rose ver 75% year-over-year, with 40% of all traffic coming from mobile devices. Jefferies analysts pointed out that Google Android remains the dominant force in mobile devices, and its Google Play Store will be the key to growing its top line. Google also recently released its Moto X smartphone, notably the first smartphone to be manufactured in the United States, during the quarter. The Nexus 5, which it manufactured with South Korean tech giant LG, recently appeared on the Google Play store for $349. Google has risen 44% over the past year, while Apple has slumped 20%. Google currently trades with a 5-year PEG ratio of 1.37 with a forward P/E of 19.5 - hinting that the stock is still an undervalued growth stock at current prices. Other News About GOOG Google's Third-Quarter Beats as Ad Volume Grows, Stock Flirts $1,000 Level
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Published on Oct 21, 2013
By Leo Sun